Case Law Details
Shine Abraham Vs State Tax Officer (Kerala High Court)
Introduction: The Kerala High Court recently delivered a verdict in the case of Shine Abraham Vs State Tax Officer, addressing the blocking of input tax credit (ITC) amounting to Rs. 16,00,000/-. The petitioner, involved in transactions with M/s. Evershine Agro Spices, faced this action due to alleged fictitious transactions and the use of fake invoices.
Detailed Analysis: The petitioner claimed to have received supplies from Mr. Shine Abraham, specifically mentioning the address of Evershine Agro Spices. However, an investigation by the Enforcement Department revealed discrepancies. The provided address, Golden Plaza, was found to have a shuttered room, with no trace of the mentioned firm. Despite attempts to locate the shop owner, the shop remained closed for an extended period.
Further investigation showed that the firm engaged in fictitious transactions by generating e-way bills. The address and invoices were found to be fake, leading to the blocking of input tax credit. The administrative decision, communicated through Exhibit P-3, highlighted the use of fake invoices by the petitioner for claiming ITC on supplies that were never received.
The Scene Mahazar, prepared on 08.06.2023, documented the closed shop and the inability to identify the owner. The decision to block ITC was justified based on the substantial evidence gathered during the enforcement inquiry. The petitioner was urged to seek alternative legal remedies, as the court dismissed the writ petition, emphasizing the gravity of using fake documents in the tax credit claims.
Conclusion: In conclusion, the Kerala High Court upheld the decision to block input tax credit, emphasizing the seriousness of engaging in fictitious transactions and using fake invoices. The judgment serves as a deterrent against fraudulent practices in GST claims, urging businesses to ensure the authenticity of their transactions. This case highlights the importance of transparency in the business ecosystem and the consequences of attempting to benefit from false documentation in tax matters.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
1. The present writ petition has been filed seeking quashing of the communication in Exhibit P-3 whereby the decision for blocking the input tax credit of the petitioner for an amount of Rs. 16,00,000/- has been communicated to the petitioner.
2. According to the petitioner, the petitioner had received supplys from Mr. Shine Abraham, M/s. Evershine Agro Spices, First Floor, Golden Plaza, 7/415-K8, Angamaly – 683 572 with GSTIN 32AZJPA1985A1ZW. The invoice number of fake GSTIN registration have been taken by people for considering the input tax credit through fake invoices.
3. From the enquiry conducted by the Enforcement Department, it was found that the said address had shutter room and the same was closed for a long period. Attempts to find out the owner of the shop had failed. After finding that the shop is closed for a long period on the basis of the proofs collected and in the presence of two undersigned independent witnesses, Scene Mahazar was prepared in respect of the shop on 08.06.2023.
4. It was also noticed that the said firm was making fictitious transactions by way of generating e-way bills. The firm mentioned above has settled their tax liabilities ITC utilisation.
5. Considering these facts that on the basis of fake invoices the petitioner had raised the claim for input tax credit on the supplies allegedly received on the basis of the fake invoices, the communication in Exhibit P-3 has been issued. Decision to block input tax credit is an administrative decision. I do not find any substance in this writ petition. The reason for blocking the input tax credit is the fake invoice and fake address of the firm from whom the petitioner had allegedly received the supply. Thus this writ petition is dismissed. The petitioner may avail to any other remedy as may be available to him under the law.
