Allahabad High Court Cancels Petition against GST ITC Reversal on Fake Supplies

The Allahabad High Court dismissed a firm's plea against the penalty, interest charged, and reversal of ITC on inward supplies of products by non-existent entities.

High Court cancels Petition against GST ITC Reversal on Fake Supplies

Reetu | May 24, 2024 |

Allahabad High Court Cancels Petition against GST ITC Reversal on Fake Supplies

Allahabad High Court Cancels Petition against GST ITC Reversal on Fake Supplies

The Allahabad High Court dismissed a firm’s plea against the penalty, interest charged, and reversal of ITC on inward supplies of products by non-existent entities.

The court upheld the additional commissioner’s order in this case.

The court observed that the bogus vitiates the solemn proceedings and that the benefit of the input tax credit (ITC) was previously granted to the taxpayer just as the firms were then enrolled shall not be used as an excuse against the council from taking the appropriate action to claim a refund of the incorrectly claimed benefit.

The taxpayer manufactures and sells aluminium casting and machinery parts, and a survey of the place of the business revealed that it claimed to have received inward supplies through three entities while claiming ITC on the same inward supplies.

Following the taxpayer’s application for the ITC, the Special Investigation Branch (SIB) conducted an investigation, which discovered that the enterprises from which the taxpayer claimed to have gotten inward supplies did not exist and were fraudulent.

The taxpayer provided evidence that it had obtained the inward supplies through records submitted to the adjudicating council, and the supplier firms obtained legal GSTIN registration when they obtained the supplies.

The taxpayer benefited from this since if the firm’s GSTIN registration is terminated, his company will not be penalized. The court said that simply because the firms were enrolled on the transaction date does not mean that the department is required to provide the ITC advantage to the taxpayer, notwithstanding the fact that the firms were not in existence and could not have produced the real supply.

The court’s decision emphasizes the need for actual transactions for businesses claiming ITC. This decision serves as a strong warning against fraudulent operations, as well as support for strict compliance with GST legislation.

StudyCafe Membership

Join StudyCafe Membership. For More details about Membership Click Join Membership Button
Join Membership

In case of any Doubt regarding Membership you can mail us at [email protected]

Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"




Author Bio
My Recent Articles
ITR Filing: Key Changes in the Income Tax Return Forms AY 2024-25 Budget 2024 likely to be presented on July 22: Final Date Awaited 53rd GST Council meeting to be held on 22nd June 2024 at New Delhi ITR Filing: Switch from New Tax Regime to Old Tax Regime; Let’s Understand How! Internship Opportunity from IIT Bombay View All Posts