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Court Upholds Demand Against Malik Traders for Wrong Availment of ITC
Due to Lack of Evidence on Physical Movement of Goods
Case Summary: M/S Malik Traders vs. State of U.P. and Others
Case No.: WRIT
TAX No. 1237 of 2021
Court: High
Court of Judicature at Allahabad
Judge: Hon'ble
Piyush Agrawal, J.
Date of Order: 18th
October 2023
Facts of the Case:
M/S Malik Traders, a
registered dealer, engaged in the purchase and sale of various types of scrap,
disclosed a turnover of ₹34,22,634 from April 2018 to September 2019, claiming
input tax credit (ITC) of ₹6,16,074.12. The tax authorities issued a notice
alleging wrongful availment of ITC, leading to a demand of ₹12,32,148, which
included the ITC amount and a penalty. Malik Traders contested the order,
arguing that they had properly purchased goods with valid tax invoices and made
payments through banking channels. They claimed the denial of ITC was
unjustified, especially when the selling dealer did not deposit the tax.
Submissions by the
Petitioner:
The petitioner argued
that:
·
They had purchased goods through proper
tax invoices, e-way bills, and made payments via banking channels.
·
The denial of ITC because the selling
dealer didn’t deposit the tax was unfair and against the spirit of the GST
regime.
·
Citing various legal precedents, the
petitioner urged for either allowing the petition or remanding it for
reconsideration.
Submissions by the
Respondent:
The respondent countered
that:
·
The petitioner failed to meet the
conditions outlined in Section 16 of the UP GST Act, which are necessary for
claiming ITC.
·
They argued that without proving the
actual physical movement of goods, ITC could not be availed, as per the
requirements of the law.
Findings and Judgement of
the Court:
The court observed that
the petitioner failed to provide sufficient evidence of the actual physical
movement of goods, such as freight charges, toll receipts, and other details
that would substantiate the genuineness of the transactions. The court referenced
previous judgments, notably the Supreme Court's decision in the Ecom Gill
Coffee Trading case, which emphasized that the burden of proving the
correctness of ITC claims lies with the purchasing dealer. The court dismissed
the petition, concluding that the authorities had rightly initiated proceedings
against the petitioner for wrong availment of ITC.
Conclusion:
The High Court of
Judicature at Allahabad dismissed the writ petition, upholding the demand and
penalty imposed by the tax authorities due to insufficient evidence provided by
M/S Malik Traders to substantiate their ITC claims.
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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