Shiv Trading vs State of Uttar Pradesh

In the case presented, the Court reviewed a writ tax petition filed by the petitioner, who challenged the order dated 01.06.2022 from the Additional Commissioner (Grade-2, Appeals-1st) in Muzaffarnagar. The writ petition was accepted due to the absence of a GST Tribunal in Uttar Pradesh following a central government notification dated 14.09.2023.

The petitioner, a registered proprietorship firm engaged in the business of buying and selling iron machinery parts and hardware, argued against the proceedings initiated under Section 74 of the GST Act. They claimed these proceedings were unjustified. The petitioner asserted that in the 2018-19 period, they legitimately purchased goods from M/s Krishna Trading Company in Mathura, paying via banking channels and subsequently claiming Input Tax Credit (ITC). However, following an inspection on 24.01.2019, M/s Krishna Trading Company was found non-existent, leading authorities to deem the transactions as bogus and fictitious. Consequently, an order dated 22.11.2021 was issued, imposing tax, penalty, and interest amounting to Rs. 45,21,097.75 for the months of May to December 2018. The petitioner’s appeal against this order was rejected on 01.06.2022.

The petitioner presented several documents to support their claim, including tax invoices, e-way bills, weighment slips before and after loading, and payments made through banking channels. Despite these submissions, the authorities dismissed them as fabricated, leading to the initiation of proceedings. The petitioner referenced various judgments from High Courts and the Supreme Court to support their position and requested the writ petition to be allowed.

The respondent, represented by the learned ACSC, defended the impugned order, arguing that the documents submitted by the petitioner, such as weighment slips and bilty, were not genuine. Inquiries revealed that neither the transport company nor the weighment location existed, implying no actual movement of goods. The respondent cited the Supreme Court’s decision in the case of State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited, which emphasized that the burden of proving the legitimacy of ITC claims lies with the dealer. They argued that the petitioner failed to provide concrete evidence of actual goods movement and requested the dismissal of the writ petition.

After examining the arguments and records, the Court noted that the petitioner did not substantiate the actual physical movement of goods. It was found that the entities purportedly involved in the transactions were non-existent, leading to doubts about the authenticity of the transactions. The Court referenced the Supreme Court’s judgment in M/s Ecom Gill Coffee Trading Private Limited, which clearly stated that the burden of proof for ITC claims rests with the claimant. Mere production of invoices and payment receipts was deemed insufficient; the claimant must prove the actual transaction and physical movement of goods.

Additionally, the Court highlighted previous rulings, including a recent judgment in M/s Malik Traders Vs. State of U.P. & Others, reinforcing that the dealer must provide concrete evidence of the actual physical movement of goods to claim ITC. The petitioner failed to meet this burden, as the entities involved in the transactions were not found to exist.

The Court concluded that the petitioner did not discharge their burden of proving the genuineness of the transactions and the actual movement of goods. Consequently, the proceedings under Section 74 of the GST Act were deemed justified. The writ petition was dismissed, affirming the authorities’ actions and upholding the impugned orders.

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Shiv Trading

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