Reliable Trading Company Vs Joint Director Directorate General of Goods and Services Tax (Allahabad High Court)
Allahabad High Court has dismissed a writ petition filed by Reliable Trading Company, challenging a show cause notice and a subsequent order raising a Goods and Services Tax (GST) demand related to alleged fraudulent availment of Input Tax Credit (ITC). The court held that claims of ITC based on supplies from non-existent firms without any actual receipt of goods fall squarely within the purview of Section 74 of the Central Goods and Service Tax Act, 2017, which deals with cases involving fraud, wilful misstatement, or suppression of facts.
The petitioner, Reliable Trading Company, a proprietorship firm formerly registered under GST but whose registration was cancelled in February 2021, had approached the High Court seeking to quash a show cause notice dated July 29, 2024, issued by the Joint Director, DGGI, Zonal Unit, Meerut, and the resulting order-in-original dated January 22, 2025, passed by the Additional Commissioner, Central Goods & Service Tax, Meerut.
The genesis of the dispute lay in information received by the authorities alleging that the proprietor of Reliable Trading Company was involved in establishing fake firms used to avail and pass on fraudulent ITC to various entities without any actual supply of goods or services. The investigation focused on purchases claimed by the petitioner from eight specific firms. While the petitioner contended that these transactions were legitimate, supported by banking channel payments, proper invoices, e-way bills, and bilties, the department’s inquiry presented a contrasting picture.
