Orissa HC Dismisses Petition on GST ITC Claims for a Non-Existent Entity and Fake Invoices

In a case about the rejection of the GST ITC claim due to allegations of a non-existent entity and fake invoices, the Orissa High Court mandated the parties to avail the statutory remedy and disregarded the petition.

The applicant, Amit Metalics Company has contested the order on 1st July 2025 passed under section 74 of the CGST Act, 2017/the Odisha Goods and Services Tax Act, 2017 ( “the GST Act”) by the Joint Commissioner of State Tax, Rourkela-II Circle, Sundergarh, wherein and whereby the petitioner was directed to pay Rs.72,63,912/- (including tax of Rs.34,49,536/-, Interest of Rs.3,64,840/- and Penalty of Rs.34,49,536/-) for the tax periods from December, 2023 to March, 2024, the applicant has approached this Court via filing this writ petition invoking extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India.

During the tax periods from December 2023 to March 2024, alleging unlawful availment or usage of the GST Input Tax Credit(ITC) as against transactions with M/s. Swastik Trade Ventures and M/s. MG Trade and Services, based on fake invoices, a proceeding u/s 74 was initiated.

To prove its claims for ITC vis-à-vis transactions effected with the aforesaid suppliers, it has submitted a response by the SCN on 29th October, 2024. It argued that it is the revenue that is needed to establish that the transactions were effected with suppliers that did not exist.

The related authority has not computed the proof adduced before him with appropriate stance; instead, the finding of fact by the authority is incorrect, insofar as the authority held the transactions bogus.

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The standing counsel for the department, opposite parties, stated that the transactions with each of the alleged non-existent entities have stated these norms. Factually, the applicant has shown receipt of supplies from suppliers who are discovered to be not present when the department was conducting an enquiry.

In the transpired assessment order, the authority concerned has recorded a finding that the transactions with the alleged nonexistent entity have been effected to take advantage of the ITC. The alleged transactions being based on bogus invoices, the authority concluded that the applicant was not eligible to avail the benefit of Input Tax Credit and utilise the same.

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Without considering the controversial aspects, which are subject to a threadbare analysis of proof on record by fact-finding authorities granted such power under the pertinent law, the Court declined to entertain the petition.

The applicant has another remedy to prove its claim qua ITC taken in the returns before the pertinent authority, specifying indulgence in the assessment order. The Chief Justice Harish Tandon and Justice Murahari Sri Raman ask the applicant to choose another remedy.