Amit Metalics Company Vs Joint Commissioner of State Tax (Orissa High Court)
The Orissa High Court dismissed a writ petition filed by Amit Metalics Company, which challenged an assessment order that rejected its claim for Input Tax Credit (ITC) and imposed a total liability of Rs.72,63,912/− (including tax, interest, and penalty) under Section 74 of the GST Act. The Court declined to exercise its extraordinary jurisdiction, stating that the dispute involved controversial questions of fact that the petitioner must resolve through the alternative statutory remedies available under the Goods and Services Tax (GST) Act.
The Allegations and Assessment Order
The petitioner was assessed for the tax periods from December 2023 to March 2024. The core allegation by the Revenue Department was the wrongful availment and utilization of ITC against transactions claimed to have been effected with two suppliers, M/s. Swastik Trade Ventures and M/s. MG Trade and Services. The department contended that the petitioner used fake invoices for these transactions, as the suppliers were found to be non-existent entities.
The assessment order passed by the Joint Commissioner of State Tax concluded that the petitioner was ineligible for the ITC benefit, finding the transactions to be fraudulent and based on fake invoices. The penalty imposed was equivalent to the amount of tax sought to be evaded.
Petitioner’s Arguments and Factual Dispute
The petitioner approached the High Court invoking Articles 226 and 227 of the Constitution of India, arguing that it had filed a detailed reply to the show-cause notice and provided documents to substantiate the transactions and the ITC claim. The petitioner’s counsel vehemently contended that the Revenue bore the burden of proof to establish that the suppliers were non-existent, and claimed that the authority had failed to properly evaluate the evidence, leading to an erroneous factual finding of fraudulent transactions.
In response, the Standing Counsel for the Department furnished an instruction detailing the findings of the departmental inquiry. The findings confirmed that the alleged suppliers were non-existent: the owner of the land stated as the place of business for M/s. MG Trade and Co. was reported to have been deceased for ten years, and the individual named in the rent agreement for M/s. Swastik Trade Ventures denied having executed the agreement. This, the Department argued, factually demonstrated that the petitioner showed receipt of supplies from non-existent suppliers.
High Court’s Judicial Constraint
The High Court, upon reviewing the material, noted that the assessing authority had recorded a clear factual finding that the transactions were effected with alleged non-existent entities using fake invoices to wrongfully avail ITC.
Crucially, the Court observed the conflicting factual evidence presented, especially the details from the Department’s instruction, which directly challenged the existence and legitimacy of the two supplier firms. The Court relied on a well-established principle of judicial restraint, holding that a Writ Court must refrain from entering into disputed questions of fact. Resolving such controversial aspects—which require a threadbare analysis of evidence and the determination of the fraudulent nature of the transactions—is the specific function of the fact-finding authorities vested with such power under the relevant statute.
Holding and Alternative Remedy
The Court acceded to the Department’s contention that the petitioner possessed a statutory alternative remedy under the GST Act (an appeal before the Appellate Authority) where it could lay evidence to justify its claim for the availed ITC. The Court concluded that granting indulgence to the assessment order at the writ stage would be inappropriate.
The High Court thus dismissed the writ petition without expressing any opinion on the merits of the factual findings returned by the assessing authority. The petitioner was relegated to avail the alternative remedy, with liberty reserved to approach the appropriate appellate authority within four weeks. The Court directed the concerned authority to consider the appeal pragmatically and expeditiously if filed within the stipulated time.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
Challenging the order dated 1st July, 2025 vide Annexure-1 passed under Section 74 of the Central Goods and Services Tax Act, 2017/the Odisha Goods and Services Tax Act, 2017 (collectively, “the GST Act”) by the Joint Commissioner of State Tax, Rourkela-II Circle, Sundergarh, wherein and whereby the petitioner was directed to pay Rs.72,63,912/- (including tax of Rs.34,49,536/-, Interest of Rs.3,64,840/- and Penalty of Rs.34,49,536/-) for the tax periods from December, 2023 to March, 2024, the Petitioner has approached this Court by way of filing this writ petition invoking extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India.
1.1. Alleging wrongful availment or utilization of Input Tax Credit during the tax periods from December, 2023 to March, 2024 as against transactions with M/s. Swastik Trade Ventures and M/s. MG Trade and Services on the strength of fake invoices, a proceeding under Section 74 was initiated.
2. Learned counsel appearing for the petitioner submitted that it has filed reply to the show-cause notice dated 29th October, 2024 and furnished documents to establish its claim with respect to Input Tax Credit vis-à-vis transactions effected with aforesaid suppliers. He contended that it is the Revenue, which is required to prove that the transactions were effected with non-existent suppliers. He vehemently contended that the authority concerned has not evaluated evidence adduced before him with proper perspective, rather the finding of fact by the authority is erroneous insofar as the authority held the transactions fraudulent.
3. Learned Standing Counsel appearing for the Department- opposite parties, during the course of hearing, furnished an instruction received from the Commissionerate of CT & GST, Odisha. He submitted that the transactions with each of the alleged non-existent entities have been clearly explained in such It is factually demonstrated that in fact the petitioner has shown receipt of supplies from suppliers who are found to be non-existent on enquiry by the department. He submitted that the factual detail given in such instruction warrants no interference in the assessment order as the alleged transactions have been thoroughly examined with reference to material available on record and such factual aspect cannot be disturbed in exercise of writ jurisdiction.
4. On perusal of the material available on record and on perusal of the assessment order, it is transpired that the authority concerned has recorded finding that the transactions with the alleged non- existent entity have been effected to avail benefits of Input Tax Credit. The alleged transactions being based on fake invoices, the authority has come to rightful conclusion that the petitioner was not eligible for availing benefit of Input Tax Credit and utilize the same.
4.1 On scrutiny of instruction as received by the learned Standing Counsel and placed before this Court, it is apparent that the owner of land which is place of business of M/s. MG Trade and Co. was stated to be dead since last ten years. In the similar tone, as regards the rent agreement of supplier M/s. Swastik Trade Ventures is concerned, Smt. Sabitri Mohanty has denied to have executed in the rent agreement.
5. Thus, this Court is afraid to enter into such factual disputed questions. Writ Court needs to restrain itself from entering into disputed questions of fact. Thus, without entering into the controversial aspects, which are subject to threadbare analysis of evidence on record by fact-finding authorities vested with such power under the relevant statute, this Court is not inclined to exercise discretion by exercising extraordinary jurisdiction under Articles 226 & 227 of the Constitution of India.
5.1 Since this Court accedes to the contention of the learned Standing Counsel for the Department that the petitioner has alternative remedy to lay evidence to justify its claim qua Input Tax Credit availed in the returns before the appropriate authority, showing indulgence in the assessment order at this stage would be inappropriate.
6. Without expressing any opinion on the merit of the matter with respect to factual finding returned by the assessing authority in the impugned order, this Court relegates the Petitioner to avail the alternative remedy. Liberty is reserved to the Petitioner to approach the appropriate authority within four weeks from today to avail remedy as provided under the GST Act. Needless to observe that if the Petitioner approaches the authority within the time stipulated, the authority concerned shall consider the same pragmatically as expeditiously as possible.
7. With the aforesaid observation and direction, the writ petition stands disposed of. As a result of the disposal of the writ petition, all pending Interlocutory Applications, if any, shall stand disposed of.
