A petition filed by a firm against the penalty, interest levied on it, and reversal of ITC on inward supplies of goods by non-existent firms has been dismissed by the Allahabad High Court.
The passed order of the additional commissioner in the same concern has been carried by the court.
The court witnessed that the bogus vitiates the solemn proceedings and the particular that the advantage of the input tax credit (ITC) has earlier been allowed to the taxpayer just as the firms were then enrolled shall not be made any estoppel against the council opting the pertinent measure to claim the refund of the advantage incorrectly claimed.
The taxpayer is involved in the manufacturing and sale of aluminium casting and machinery parts and, in a survey of the place of business, it was discovered that it asserted to have received inward supplies via 3 firms and claimed ITC on the same inward supplies.
Post claiming the ITC via the taxpayer, an inquiry was performed via the Special Investigation Branch (SIB) and revealed that the firms from which the taxpayer has claimed to have obtained inward supplies were not in existence and were fake.
The taxpayer furnished that it has actually obtained the inward supplies which is made via records produced to the adjudicating council, and the supplier firms secured the valid GSTIN registration when the same had obtained the supplies.
The taxpayer availed that consequently if the GSTIN registration of the company gets cancelled then his company does not get penalised for it. Just due to the firms enrolled on the transaction date it couldn’t stated that the department is obligated to furnish the ITC advantage before the taxpayer despite the fact that the firms were not in existence and they can not have made the actual supplies, the court stated.
Read Also: Easy Explanation of GST ITC Reversal (Non-Payment 180 Days)
The ruling of the court shows the important need for businesses to encounter genuine transactions when claiming ITC. With this judgment, a strict warning against bogus practices is been carried apart from that it supports the need for stringent compliance with GST statutes.
| Case Title | M/S Rajshi Processors Raebareli Vs State Of U.P. |
| Citation | WRIT TAX No. – 128 of 2024 |
| Date | 14.05.2024 |
| For Petitioner | Anurag Mishra |
| For Respondent | C.S.C. |
| Allahabad High Court | Read Order |