Principal Commissioner CGST vs Bushrah Export House Two Star

Allegations in SCN should be clear and specific and the findings cannot go beyond the allegations levelled in SCN

Heard the counsel for the petitioner and Sri Jayant Kumar assisted by Sri Vibhanshu Srivastava, the counsel for the respondents. 

The present petition has been filed challenging the appellate order dated 13.08.2021 passed by the Additional Commissioner (Appeals), Customs, GST and Central Excise whereby the Appeal No.31-GST/2020 has been allowed. The said appeal is stated to have been preferred by the respondents against the Order-in-Original dated 24.04.2020 passed by the Deputy Commissioner, Central Excise and Service Tax, Division-I, Lucknow whereby the claim of the respondents was rejected. The facts, in brief, are that the respondents moved an application seeking refund of the CGST through their application dated 20.02.2020 claiming an amount of Rs.1,84,17,252/- on the tax paid inputs of the Goods, which was ultimately exported by the respondents. 

It is claimed that after verifying the claims, prima-facie an acknowledgment was issued to the respondents and a provisional order dated 04.03.2020 allowing partial refund amounting to Rs.1,65,75,526.80 was granted on a provisional basis out of the total refund claimed. When the claims of the respondent were subjected to scrutiny, the department was of the view that the provisional refund granted to the respondents was erroneous refund and, as such, a show cause notice dated 07.04.2020 was issued to the respondents calling upon the respondents to show cause as to why the application for grant of refund may not be rejected and further why the recovery of the sanctioned amount should not be initiated against the respondents and why the recovery of Input Tax Credit of the remaining amount should not be initiated along with the interest thereupon. The show cause notice is contained in Annexure no.2 to the writ petition. From perusal of the show cause notice, it is clear that the allegations were that the respondents had claimed the Input Tax Credit in the form of IGST against the supply received from three Tax Payers named therein. It was further alleged that one of the supplier namely M/s Risuddeen Kamruddin Shekh had issued 132 invoices totaling to Rs.10,02,08,500/- in the month of January 2019, similarly one supplier namely M/s Sagar Rajendra Sonvane had issued 84 invoices totaling to Rs.6,38,07,492/- in the month of March 2019 and similarly M/s Ahmed Tax had issued 10 invoices in the month of April 2019 totaling to Rs.9,70,666/-, 18 invoices in May 2019 totaling to Rs.17,81,692/- and three invoices in the month of June 2019 totaling to Rs.3,07,592/-. It was further alleged that as per the E-way Bill Rules contained in Chapter XVI of the CGST Rules 2017, the information was required to be furnished prior to the commencement of the movement of the goods and generation of e-way bill by the registered person, which has not been done. This fact was revealed to the department on the scrutinizing of GSTR-2A return filed by the respondents. It was further alleged that all theses three suppliers named above had done huge volume of business in a very short span of time and subsequently their registration was canceled. 

The respondents were called upon to show cause and to produce the invoices raised by the said suppliers / taxpayers and e-way bills generated in the process so as to ascertain if the goods were indeed received by the respondents and the Input Tax Credit has been claimed in accordance with the Section 16(2) of the CGST Act 2017.

It has been alleged that despite asking for the same, the respondents failed to produce the same and thus, they were asked to show cause as to why the action as prescribed in the show cause notice may not be taken. It is claimed that the respondents did not give the reply which led to the passing of the order dated 24.04.2020 (Annxure no.3). In the said order, it has been recorded that the taxpayer did not respond against the charges raised in the show cause notice and neither did the taxpayer appear on the personal hearing date and thus agreeing with the allegations levelled in the show cause notice, a view was formed by the Deputy Commissioner that the suppliers to the respondents had actually not supplied the goods in the absence of their being any e-way bill generated in favour of the respondents and thus the following order came to be passed : “(i). I reject the remaining 10% of the Refund claim amounting to Rs. 18,41,725/-.

(ii). I confirm the recovery of Input Tax Credit of the remaining refund amount i.e. Rs. 18,41,725/- under Section 74 read with Section 16 of the CGST Act, 2017 read with the IGST Act, 2017.
(iii). I confirm that the refund to the taxpayer has erroneously been made and accordingly, the already sanctioned amount to the tune of Rs. 61,18,640/- may be recovered under Section 74 of the CGST Act, 2017, read with the IGST Act, 2017. 
(iv). I confirm the interest on the above points (ii) and (iii) under Section 50 read with Section 54 of the CGST Act, 2017, read with the IGST Act, 2017. 
(v). I impose the penalty amounting to Rs.79,60,365/- under Section 74 of the CGST Act, 2017, read with the IGST Act, 2017. 
(vi). I impose the penalty amounting to Rs.79,60,365/- under Section 122 (1)(viii) of the CGST Act, 2017 for obtaining refund fraudulently, read with the IGST Act, 2017. 
(vii). I impose the penalty amounting to Rs.79,60,365/- under Section 122 (1)(xiv) of the CGST Act, 2017 for transporting taxable goods without the cover of specified documents i.e. e-way bill, read with the IGST Act, 2017.” 

The respondents aggrieved against the said order preferred an appeal before the Additional Commissioner (Appeals) CGST, Lucknow wherein it was specifically stated that the inputs received by the respondents were sent from Surat to the warehouse of the respondents at Surat where they were processed and subsequently the goods were exported through ICD Kanpur after transporting the goods from Surat to Kanpur. They placed reliance upon the notification No.GSL/GST/Rule-138 (14)/B.19 dated 19.09.2018 issued by the Commissioner of State Tax, Gujarat State Ahmadabad wherein the authority had issued a notification providing that e-way bill was not required to be generated for intra-city movement of any goods irrespective of the value.

Download Pdf:
Principal Commissioner Cgst And Central Excise Lucknow AndAnr

For Reference Visit:
Allahabad High Court

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GST Case Law