Tvl. R.M.K. Enterprises Vs State Tax Officer (Madras High Court)
Madras High Court has dismissed a writ petition filed by Tvl. R.M.K. Enterprises, upholding the State Tax Officer’s demand for Goods and Services Tax (GST) for the assessment years 2017-18, 2018-19, and 2019-20. The court found prima facie evidence suggesting the petitioner was involved in facilitating the passing of ineligible Input Tax Credit (ITC).
The petitioner, a dealer in scrap steel, had challenged assessment orders dated February 3, 2021, which confirmed the GST demand. The core of the dispute revolved around ITC availed by Tvl. R.M.K. Enterprises from various suppliers, including Tvl. R.R. Trading & Co., Tvl. Asian Steels, and Tvl. Lucky Scrap Traders.
Allegations of Non-Existent Dealers and Circular Trading
The State Tax Department’s case centered on the assertion that the petitioner had transacted with “non-existing dealers” who merely passed ineligible credit. The department alleged that none of these suppliers had paid any GST in cash, and they were part of a larger scheme to engage in “circular trading” to pass on ineligible ITC.
The court noted that summons were initially issued by Central Authority under Section 70 of the CGST Act, 2017, despite the petitioner being assessed by State Authorities. Subsequently, statements were recorded from the petitioner, and Show Cause Notices were issued, seeking to deny ITC claimed by the petitioner based on invoices from these allegedly non-existent dealers.
