Metal Trade Incorporation Vs State Tax Officer (Madras High Court)
Summary: The Madras High Court considered a writ petition filed by M/s Metal Trade Incorporation challenging proceedings dated 11.05.2023 and 13.09.2023 under which the petitioner’s Input Tax Credit in the Credit Ledger had been blocked under Rule 86A of the Tamil Nadu Goods and Services Tax Rules, 2017.
The petitioner was a trader in Iron and Steel Products and possessed valid GST registration. The judgment records that, from 01.07.2017, the petitioner had filed the specified returns and paid GST collected on its supplies under the CGST and SGST Acts. On 18.10.2022, the first respondent issued summons under Section 70(1) of the Acts. The petitioner subsequently challenged the summons in WP.No.3033 of 2023, which was disposed of with a direction to appear before the first respondent and present objections concerning simultaneous prosecution by Central and State authorities. The petitioner appeared and statements were recorded. An intimation dated 03.02.2023 proposed a penalty demand for assessment years 2017-18 to 2022-23.
Based on intelligence and initial findings, the third respondent issued a communication dated 11.05.2023 to Joint Commissioners (ST) of Chennai, stating that the petitioner was found to be a non-existent dealer and directing reversal of Input Tax Credit claimed by beneficiaries under Rule 86A of the GST Rules, 2017. Proceedings were thereafter issued to block the Input Tax Credit of beneficiaries of the bill trader. The petitioner had been treated as a beneficiary and bill trader without adjudication.
