ITC denial: Hindustan Unilever Called Non-Existent Supplier by GST Department, High Court Quashes Order as Arbitrary

The learned counsel for the petitioner submitted that the petitioner is dealing with retail and wholesale business of various FMCG products and is filing their monthly and annual returns regularly. Upon verification of the returns filed by the petitioner for the financial year 2020-21, the GST Department observed a discrepancy concerning the Input Tax Credit (ITC) claimed on inward supplies received from Tvl. Hindustan Unilever Limited. Thereafter, the respondent has issued a show cause notice on 15.06.2024, alleging that Tvl.Hindustan Unilever Limited is a ‘fictitious business entity‘ and a ‘non-existent supplier‘. Consequently, the respondent blocked the ITC claimed on the purchases made from the said supplier and called upon the Petitioner to explain why the ITC claimed on these invoices should not be disallowed.

The petitioner submitted its reply on 23.07.2024 stating that the ITC claimed pertaining to the purchases of the supply made from the Tvl.Hindustan Unilever Limited is valid and was availed upon getting reflected in the GSTR 2A.

The petitioner also attached invoices pertaining to the purchases made from Hindustan Unilever Limited for the Financial Year 2019-20. But the respondent, without considering the reply filed by the petitioner, passed the impugned order dated 04.04.2025, wherein the alleged tax demand has been confirmed along with interest and penalties.

It is also submitted by the learned counsel for the petitioner that M/s.Hindustan Unilever Limited is a large business conglomerate in India engaged in various businesses, and it cannot be simply alleged that they are “non-existent“, without affording any tangible evidence to that effect, and therefore, the impugned order is arbitrary and has been passed without application of mind.

Considering the above submissions made by the learned counsel on either side and upon perusal of the materials, this Court can visualise the non-application of mind by the respondent in arriving at a conclusion that M/s. Hindustan Unilever Limited is a non-existent Company. Therefore, this Court is inclined to set aside the impugned order.