Case Law Details
Tvl. Fathima Traders Vs Deputy Commercial Tax Officer (Madras High Court)
The Madras High Court set aside assessment orders denying the petitioner’s Input Tax Credit (ITC) for three assessment periods and remanded the matter for fresh consideration. The petitioner challenged the orders primarily on the ground that its supplier was a registered GST dealer on the dates when the transactions took place.
The petitioner contended that ITC had been denied solely because the supplier’s GST registration was cancelled retrospectively with effect from 01.07.2017. Relying on an earlier judgment of the High Court, it argued that retrospective cancellation of a supplier’s registration alone cannot justify denial of ITC.
The Revenue submitted that some invoices had been issued after the actual cancellation date and also contended that the petitioner had failed to produce documents establishing that the supplies were genuine.
The Court referred to its earlier decision, which held that while a purchaser may be required to establish that the supplier existed at the relevant time and that the transactions were genuine through documents such as tax invoices, e-way bills, lorry receipts, delivery challans and proof of payment, ITC cannot be rejected solely because the supplier’s registration was cancelled retrospectively.
The Court noted that the respondent had admitted that the supplier’s registration was cancelled only by an order dated 06.12.2022, whereas most of the disputed transactions had taken place before that date. It further found that the impugned assessment orders rejected the petitioner’s ITC claim solely on the basis of the retrospective cancellation of the supplier’s registration without examining whether the petitioner had established genuine receipt of goods through supporting documents.
Holding that such an approach was unsustainable, the High Court set aside the assessment orders and remanded the matter for reconsideration. The assessing authority was directed to provide the petitioner with a reasonable opportunity of hearing, examine the relevant documents relating to the genuineness of the transactions, and pass fresh orders within three months from receipt of the Court’s order.
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FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Orders dated 05.06.2023 pertaining to three distinct assessment periods are assailed in these writ petitions primarily on the ground that the supplier was a registered person on the date when the relevant transactions took place.
2. Learned counsel for the petitioner refers to the impugned orders and points out that Input Tax Credit was denied to the petitioner solely on the ground that the supplier’s GST registration was cancelled with retrospective effect from 01.07.2017. Relying on an earlier order of this Court dated 15.02.2024 in W.P.No.3505 of 2024 M/s. Engineering Tools Corporation v. The Assistant Commissioner (ST), Vepery, Chennai 600 003, he contends that orders impugned therein were set aside in substantially similar facts and circumstances.
3. In response, Mr. L. Gokulraj, learned Government Counsel (Tax), submits that some of the invoices from the petitioner’s supplier were issued after the actual cancellation date. He also submits that the petitioner did not submit documents to establish that the supplies were genuinely received.
4. In the order relied upon by learned counsel for the petitioner, it was recorded, in relevant part, as under:
“From the above extract, it is abundantly clear that the contentions of the petitioner were rejected entirely on the ground that the petitioner should have proved the existence of M/s. Shikhar Technologies. The petitioner purchased goods in 2017-2018 and, at the highest, the petitioner may be called upon to produce evidence of the existence of the supplier at the relevant point of time. In addition, the petitioner may be called upon to prove that the transaction was genuine by providing relevant documents such as tax invoices, e-way bills, lorry receipts, delivery challans, proof for payment and the like. In the case at hand, it appears that the petitioner submitted such documents but these documents were disregarded. The impugned assessment order is unsustainable in the facts and circumstances.
6. Hence, the impugned assessment order is quashed and the matter is remanded for reconsideration. The assessing officer is directed to consider whether the transaction was genuine by examining all relevant documents in that regard. The ITC claim shall not be rejected upon such reconsideration solely on the ground that the supplier’s GST registration was cancelled with retrospective effect and a fresh assessment order shall be issued upon reconsideration, after providing a reasonable opportunity to the petitioner, within a maximum period of two months from the date of receipt of a copy of this order.”
5. In the case at hand, it is admitted by the respondent, at paragraph 8 of the counter, that the registration of the petitioner’s supplier was cancelled by order dated 06.12.2022. The orders impugned herein record the date of supply. Most of the transactions are prior thereto. The impugned orders also reject the Input Tax Credit claim of the petitioner solely on the ground of the retrospective cancellation of the petitioner’s supplier’s registration. For reasons set out in the earlier order dated 15.02.2024, the impugned orders cannot be sustained. In other words, without examining as to whether the petitioner had established supply of goods by submitting invoices, e-way bills, lorry receipts and the like, the petitioner’s claim should not have been rejected solely on the ground of the retrospective cancellation of the suppliers registration.
6. Hence, orders impugned herein are set aside and the matter is remanded for re-consideration. After providing a reasonable opportunity to the petitioner, fresh order shall be issued within three months from the date of receipt of a copy of this order.
7. These writ petitions are disposed of on the above terms. No costs. Consequently, the connected writ miscellaneous petitions are closed.
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