Failure to Consider GST Portal Details & Returns Bars Initiation of Demand Proceedings: Allahabad HC

Rama Brick Field Vs Additional Commissioner (Allahabad High Court)

The case of Rama Brick Field vs. Additional Commissioner Grade-2 before the Allahabad High Court pertains to the petitioner challenging orders under Section 74 of the Uttar Pradesh Goods and Services Tax (UP GST) Act. The petitioner, engaged in compounding for a specific period, faced allegations of tax evasion related to purchases from Rohit Coal Traders. The case delves into the complexities of the Goods and Services Tax regime, with the petitioner asserting their adherence to the compounding scheme and providing evidence to substantiate genuine transactions. The High Court’s observations underscore the significance of considering details available in the GST portal, and the ultimate decision sets the tone for the treatment of such cases within the framework of GST laws.

Background: The petitioner challenged the order dated 15.7.2020 under Section 74 of the Uttar Pradesh Goods and Services Tax (UP GST) Act related to the period from May 2018 to June 2018 for Assessment Year 2018-19. The petitioner had opted for compounding during the period of 10.2017 to 21.3.2019, and compounding was accepted. The proceedings under Section 74 were initiated against the petitioner for alleged tax evasion related to the purchase of coal from Rohit Coal Traders.

Arguments of the Petitioner: The petitioner contended that, as they had opted for composition, they could not claim the benefit of input tax credit. The petitioner argued that they made purchases from Rohit Coal Traders, and despite payment of tax, no input tax credit was availed. The petitioner claimed that the purchases were genuine and supported by evidence such as tax invoices, e-way bills, payment receipts, etc. The petitioner stated that Rohit Coal Traders had filed their returns in GSTR-1 and GSTR-3B.

Arguments of the Respondents: The respondents argued that merely opting for composition does not prohibit the initiation of proceedings under Section 74. The authorities alleged that the purchases from Rohit Coal Traders were bogus, as Rohit Coal Traders was found to be nonexistent at the time of survey.

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