Summary: The article highlights the crucial role of a well-drafted Statement of Facts in GST appellate proceedings, emphasizing that facts form the foundation of every successful appeal before the GST Appellate Tribunal. While legal arguments and judicial precedents are important, the Tribunal first determines what actually occurred before applying the law. Drawing from the Bharatiya Sakshya Adhiniyam, 2023, the article explains that facts include both physical and psychological aspects and must be supported by credible evidence such as invoices, e-way bills, contracts, tax returns, and banking records. It also stresses the importance of establishing positive facts, disproving negative allegations, and presenting only legally relevant facts in a logical, chronological manner. Since the GST Appellate Tribunal is the final fact-finding authority, the quality, consistency, and completeness of the factual narrative significantly influence the outcome of litigation. A concise, evidence-backed Statement of Facts enables the Tribunal to appreciate the dispute and adjudicate the appeal effectively.
Introduction:
In any litigation, facts play a very critical role. If facts are not brought out correctly, then the foundation on which the matter is litigated will fall apart. In any litigation practice understanding the importance and relevancy of fact is critical. The success of a GST appeal is often attributed to persuasive legal arguments and authoritative judicial precedents. However, seasoned litigators know that every successful appeal begins much earlier with a clear, accurate and well-supported statement of facts. Before the GST Appellate Tribunal interprets a statutory provision or applies a judicial precedent, it must first ascertain what actually transpired. The facts of the case are exclusive to each appellant hence the judicial precedence can be drawn reference one and only if the facts are identical.
If we have to delve deep into the concept of facts, let us understand the basic concepts that are laid down in THE BHARATIYA SAKSHYA ADHINIYAM, 2023.
Sec. 2 (f) “fact” means and includes—
- any thing, state of things, or relation of things, capable of being perceived by the senses;
- any mental condition of which any person is conscious.
The phrase “means and includes” at the beginning of a statutory definition make the definition complete further making the scope enlarged but without any ambiguity. It is neither purely exhaustive (“means”) nor merely illustrative (“includes”); rather, it combines both functions.
The rights and liabilities in a judicial proceedings arise out of facts. The facts can be of two types
- Physical facts : it means and includes anything capable of being perceived by bodily senses otherwise called as external facts
- Psychological facts : the facts that cannot be perceived by senses are
This article examines the significance of facts in GST appellate proceedings and explores how a well-crafted factual narrative can influence the outcome of litigation before the Tribunal.
Every second appeal before the GST Appellate Tribunal begins with a “Statement of Facts.” While many practitioners treat this section as a mere narration of events, it is, in reality, the foundation upon which the entire appeal rests. Before the Tribunal examines the legality of an assessment, denial of input tax credit, classification, valuation, or levy of penalty, it first seeks to understand what actually happened. Law is applied only after the facts are established.
While drafting the “statement of facts” which is the backbone of GST litigation, needs to be carefully put forward. Each assertion of facts to be supported by evidence so that, it stands the test of quasi judicial authority.
To illustrate,
- if movement of goods are to be asserted to substantiate supply, e-way bill is the authenticated evidence.
- Issuance of invoice is backed by contract or agreement between parties
- Filing of return and payment of taxes for availing ITC
It is not that every dispute, revolves around only documentary evidence. Many a times, it becomes imperative to bring the facts on records of the internal facts namely
- whether tax payer acted in good faith
- whether there were any intention to evade tax
- whether the disclosure made by the taxpayer are Bonafide
- whether the transaction entered into between parties are genuine or sham and so on.
The GST tribunal being the final facts finding authority, it is very essential for the tax payer to demonstrate both existence of positive fact and absence of negative facts. A “mistake of fact” occurs when a person genuinely misunderstands the circumstances or facts around an incident. Though mistake of fact is excusable, the professional missing on the facts while drafting the case, may not be viewed by Tribunal is a lighter manner.
The GST appeal succeeds because the Department fails to prove that negative allegations. Therefore, on the other side, the taxpayer has to prove the presence of positive facts.
While drafting Statemen to facts the appellant has to ensure that
- The supply was made
- Taxes were paid
- Goods were received
- Payments were made through banking channel etc
At the same time, negative allegations are to be proved by
- No unaccounted stock of goods are found while carrying out inspection
- No allegation of fake invoice was made in Show cause notice
- No evidence to establish that goods not received and so on.
Since the Tribunal is the final fact-finding authority, the quality, consistency, and completeness of the Statement of Facts often determine the ultimate outcome of the litigation.
Ingredients of a good statement of facts
We must never assume that, Tribunal knows the facts of the case. However, the Statement of Facts should not resemble a reproduction of the Show Cause Notice or the impugned order. Instead, it should narrate the sequence of events in a logical and chronological manner. The basic essentials of a good statement of facts must contain the following
- What was the transaction? – No material fact relating to the dispute to be omitted. The relevant transaction that has bearing on the outcome of the case must be brought out in clear terms.
- Who were the parties?
- When did each material event occur?, the events that are necessary and will have influence on the decision must be recorded. The events that are of no consequence on the disputed matter need not be narrated.
- What documents support the transaction? Every material fact should be supported by corroborative evidence.
- How did the dispute arise? The origin of the dispute, the issue involved in the case on which the party has been aggrieved or allegation by the department must be brought out in clear terms.
- Why is each fact legally relevant? It helps the Tribunal in quickly deciding on the case. Also the rights of the parties are established while bringing out facts in a concise manner.
When these questions are answered clearly, the Tribunal is able to appreciate the controversy even before considering the legal submissions.
A fact is said to be proved when, after considering the matters before it, the Tribunal believes it to exist or considers its existence so probable that a prudent man ought, under the circumstance of particular case, to act upon te supposition that it exists.
A fact is said to be disproved when after considering the matters before it, the tribunal believes that it does not exist. However, the facts in respect of which Tribunal must take judicial notice need not be proved. Though The GST Tribunal is not strictly governed by the provisions of Bharatiya Sakshya Adhiniyam, 2023, it is guided by well established principles.
In the context of GST litigation, the examples include
- the date on which a statutory notification, circular or amendment came into force;
- the due dates prescribed under the GST law
- the constitution and territorial jurisdiction of tax authorities;
The appellant who wishes to believe that the facts exists must prove before the Tribunal.
An effective Statement of Facts does not narrate every event that occurred. It identifies and pleads only those facts that have a bearing on the issues under appeal. Excessive or irrelevant narration often obscures the real controversy and weakens the persuasive force of the appeal.
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