Onus is on Assessee to prove movement of goods & services under GST

Roshan Sharma Vs Assistant Commissioner of Revenue (Calcutta High Court)

The Hon’ble Calcutta High Court in the case of Roshan Sharma v. Assistant Commissioner of Revenue, State Tax, West Bengal & Ors. (M.A.T. 854 of 2024 dated May 07, 2024) set aside the Adjudication Order affirming tax demand, interest, and penalty proposed in the Show Cause Notice. The matter was remanded back because the Assessee had not been given an effective opportunity to rebut allegations, which had been made against the supplier and transporter from whom the statement was obtained.

Facts:

Roshan Sharma (“the Appellant”) stated that the registration of selling dealer’s was cancelled with retrospective effect and on the date on which the transactions were done by the Appellant, the registration of the selling dealer was valid. The Appellant failed to prove that there was a movement of goods.

Therefore, a Show Cause Notice dated November 03, 2024 (“the SCN”) was issued to the Appellant demanding INR 2,82,32,394/- along with interest and penalty. Subsequently, an Adjudication Order dated February 01, 2024 (“the Impugned Order”) was passed by the Assistant Commissioner of Revenue, State Tax (“the Adjudicating Authority”) confirming the demand raised in the SCN.

The Appellant was not given an effective opportunity to rebut the allegations, which have been made against the Supplier and the transporter from whom the declaration has been obtained by the Authority.

The Appellant contended that there were a bunch of e-way bills, which clearly showed the transportation of goods to various purchasers from the Appellant and such e-way bills cannot be rejected as fake since there are statutory documents and will be available on the GST portal.

Hence, aggrieved by the Impugned Order, the Appellant filed the present writ petition.

Issue:

Whether the onus is on the Assessee to prove the movement of goods and services?

Held:

The Hon’ble Calcutta High Court in M.A.T. 854 of 2024 held as under:

• Directed that, the Adjudicating Authority to furnish the copies of the statements obtained from the suppliers and transporters to the Appellant within a week. The adjudication shall be completed as expeditiously as possible preferably within a period of 60 days. Further, the Appellant is entitled to submit his further explanation along with the necessary documents. If the Appellant requests for cross-examination of those persons, the same should be permitted. Thereafter, the Adjudicating Authority shall pass fresh orders on merits and in accordance with law.
• Noted that, there was a negative balance in the credit ledger. Therefore, as on date, the blocking of such ledger will not in any manner be prejudiced against the Appellant. However, it was made clear that in case funds flow into the ledger, the blocking of the ledger shall be restricted to a sum of INR.2,82,32,394/- only.
• Held that, the Appellant is bound to prove by proper evidence to establish the movement of goods and in the present case, the Appellant had no opportunity to cross-examine the Suppliers and transporters. Further, the statements recorded from them were not furnished to the Appellant. Hence, the case was remanded to the Adjudicating Authority for fresh consideration. The appeal and the writ petition including connected applications were allowed. The Impugned Order was set aside.

Conclusion: The judgment in Roshan Sharma v. Assistant Commissioner of Revenue serves as a reminder of the Assessee’s responsibility to prove the movement of goods and services. Additionally, it underscores the fundamental principle of providing an effective opportunity for the Assessee to present their case and rebut allegations. This ruling reiterates the significance of procedural fairness and adherence to legal principles in tax adjudication processes.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

1. We have heard the learned advocates for the parties.

2. With the consent of the learned advocates of either side, the appeal and the writ petition are taken up for disposal and are disposed of by this common judgment and order.

3. The appellant had filed the writ petition challenging an adjudication order passed by the Assistant Commissioner of Revenue, State Tax, West Bengal, Strand Road, Chinabazar and Rajakatra Charge dated 1^st February, 2024. By the said order, the proposal in the show-cause notice dated 3^rd November, 2023 was affirmed and tax of Rs.2,82,32,394/- (CGST & SGST) along with interest and penalty was demanded.

4. It is no doubt true that the appellant has an effective alternate remedy by way of an appeal before the statutory appellate authority for which the appellant has to pre-deposit 10% of the disputed tax. However, in the facts and circumstances of the case, we are satisfied that the appellant has not been given an effective opportunity to rebut the allegations, which have been made against the supplier and the transporter from whom statement/declaration has been obtained by the authority.

5. Admittedly, the appellant has not been furnished with copies of the same nor has been afforded an opportunity of cross-examination, though such a request was specifically made by the appellant in his reply dated 18^th December, 2023.

6. That apart, the appellant has stated that the cancellation of the registration of the selling dealer was done with retrospective effect and on the date on which the transactions were done by the appellant, the registration of the selling dealer was very much valid. Even assuming the same to be factually correct, still the onus is on the appellant to prove movement of goods.

7. The learned advocate for the appellant would vehemently contend that there are bunch of e-way bills, which clearly show the transportation of goods to various purchasers from the appellant and such e-way bills cannot be rejected as fake since, there are statutory documents and will be available in the portal of the department.

8. Thus, considering the fact that the appellant had no opportunity to cross-examine Mr. Shyam Sundar Tiwari or Mr. Ashoke Kumar Saha and the statement recorded from them were not furnished to the appellant, this is a fit case, where the matter should be remanded to the adjudicating authority for a fresh decision after affording an opportunity to the appellant.

9. Accordingly, appeal and the writ petition as well as connected application are allowed and the order of adjudication dated 1^st February, 2024 is set aside with a direction to the adjudicating authority to furnish copies of the statement/declaration obtained from Mr. Shyam Sundar Tiwari or Mr. Ashoke Kumar Saha to the appellant within a week from date and the adjudication shall be completed as expeditiously as possible preferably within a period of 60 days from date and the appellant is entitled to submit his further explanation along with the necessary documents and if the appellant requests for cross-examination of those persons, the same should be permitted and thereafter, the adjudicating authority shall pass fresh orders on merits and in accordance with law.

10. It is admitted by the appellant that there is a negative balance in the credit ledger. Therefore, as on date, the blocking of such ledger will not in any manner prejudice the appellant. However, it is made clear that in case funds flow into the ledger, the blocking of the ledger shall be restricted to a sum of Rs.2,82,32,394/- only.

11. The appellant is bound to prove by proper evidence to establish the movement of goods (purchase/sales).

12. No costs.

13. Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities.

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