W.P.(MD)No.11035 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 30.10.2024
CORAM
THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ
W.P.(MD)No.11035 of 2023
and
W.M.P.(MD)No.9667 of 2023
Tvl.T.S.R.Trading Company,
Represented by its Proprietor,
T.Sahid Ahamed ... Petitioner
Vs.
1.The Commissioner of Commercial Taxes,
O/o. The Principal and Special Commissioner of
Commercial Taxes,
Ezhilagam, Chepauk,
Chennai – 600 005.
2.The Deputy Commercial Tax Officer/
The Deputy State Tax Officer – 2,
Dindigul Town Assessment Circle,
Commercial Taxes Office,
Deputy Collector Office Road,
Dindigul – 624 201. ... Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of India for
issuance of Writ of Certiorari, to call for the records pertaining to the impugned
proceedings of the second respondent in Order No.
33EYHPS0007L1ZE/2021-22 dated 10.03.2023 and quash the same.
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For Petitioner : Mr.B.Rooban
For Respondents : Mr.T.Amjadkhan
Government Advocate
O R D E R
This Writ Petition is filed challenging the impugned order dated
10.03.2023 for the period 2021-2022 on the premise that the denial of the Input
Tax Credit on the ground that the petitioner has not received any goods from the
alleged supplier is in violation of principles of natural justice.
2. It is submitted by the learned counsel for the petitioner that the
petitioner is engaged in trading of paper board waste etc and registered under
GST Act. The petitioner, for the period in dispute ie., 2021-2022, has filed its
returns reporting a total taxable turn over of Rs.1,64,85,795/- in
GSTR-3B. The petitioner claimed Input Tax Credit on the alleged supplies
received from one JB Traders bearing Registration in GSTIN
33CYBPG1123R1ZJ, the claim of ITC made by the petitioner on such supplies
was rejected vide impugned order dated 10.03.2023 on the premise that JB
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W.P.(MD)No.11035 of 2023
Traders was non-existent/fictitious and thus the claim of the Input Tax Credit is
illegal. The petitioner would submit that purchases were effected from JB
Traders during December 2021 of the following materials:
SI No. HSN Description
Code
1. 48 (waste and scrap) paper or paperboard
2. 4004 Waste, parings and scrap of rubber (other than hard
rubber) and powders and granules obtained therefrom
3. 41 Raw hides and skins (other than furskins) and leather
4. 28 Inorganic chemicals, organic or inorganic compounds of
precious metals, of rare-earth metals, of radioactive
3. It is further submitted by the learned counsel for the petitioner that the
place of business of JB Traders was inspected by the Intelligent Officers under
Section 67 of the TNGST Act, 2017 and found that JB Traders was non-
existent. Verification of the petitioner's GSTR-2A revealed that the petitioner
had claimed to have made the following purchases from JB Traders and availed
the Input Tax Credit as detailed below:
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W.P.(MD)No.11035 of 2023
Ineligible Input Tax Credit
GSTIN of Invoice Invoice Invoice Rate Taxable IGST CGST SGST
Supplier No. Date Value Value Amount Amount Amount
33CYBPG 241 02-12-20 338940 5 322800 -- 8070 8070
1123R1ZJ 21
33CYBPG 242 05-12-20 365400 5 348000 -- 8700 8700
1123R1ZJ 21
33CYBPG 243 10-12-20 220500 5 210000 -- 5250 5250
1123R1ZJ 21
33CYBPG 244 12-12-20 220500 5 210000 -- 5250 5250
1123R1ZJ 21
1090800 0 27270 27270
4. The above claim of Input Tax Credit was sought to be disallowed on
the premise that the Input Tax Credit was availed on the strength of fake
invoices. In response to the DRC-01 and notice, the petitioner inter alia
submitted the following:
a) The supplies in respect of which Input Tax Credit is sought to be rejected, are
made from JB Traders, Dindigul bearing GST Registration No.
33CYBPG1123R1ZJ, the petitioner purchased from the registered suppliers.
The claim of the Input Tax Credit was supported by original purchase invoices
and the supplies were also supported by consideration which was made by the
petitioner to the suppliers.
b) The transaction was also reflected in GSTR 01 by the suppliers and was
auto-populated in the petitioner's GSTR-2A and hence the question of reversal
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W.P.(MD)No.11035 of 2023
on the ground of fake invoices or non existing dealer does not arise.
c) If for any reason, the transactions are found to be in contravention of any
provision of the GST Act, the authorities ought to proceed against the suppliers
and cannot deny the petitioner the Input Tax Credit. That non payment or non
filing of return by the supplier cannot be a reason to reject the petitioner's claim
of Input Tax Credit or fasten the liability on the petitioner. Reliance was sought
to be placed on the following judgments:
(i) Sri Vinayaga Agencies v. Assistant Commissioner (CT),
Vadapalani-1 Assessment Circle, Chennai reported in (2013) 60 VST 283
(Mad).
(ii) Althaf Shoes (P) Ltd. Vs. Assistant Commissioner (CT)
Valluvarkottam Assessment Circle Chennai reported in (2012) 50 VST 179
(Mad).
(iii) Gheru Lal Bal Chand Vs. State of Haryana reported in (2011) 45
VST 195.
(iv) Infinite Wholesale Limited Vs Assistant Commissioner (CT), W.P.
9265/2013 dated 06.11.2014 reported in 82 VST 457.
d) Without prejudice to the entitlement to Input Tax Credit with regard to the
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W.P.(MD)No.11035 of 2023
transaction between the petitioner and JB Traders, the petitioner may be
furnished with the reasons based on which JB Traders are stated to be non-
existent. The petitioner had prayed for cross examination, placing reliance upon
the following judgments of the Hon'ble Supreme Court:
(i) State of Kerala Vs K.T.Shaduli Grocery Dealer reported in (1977) 39
STC 478,
(ii) T.M.Rajaganapathi Traders VS. Commercial Tax Officer, Salem
reported in (2005) 142 STC 130,
e) Personal hearing was also sought for by the petitioner placing reliance upon
Asia L.P.G. Pvt. Ltd. vs State Of Karnataka And Others reported in
(1997) 107 STC 29.
f) Reliance was also placed on press release by the Central Board of GST
counsel dated 04.05.2018, wherein it has been stated that there would not be
automatic reversal of Input Tax Credit on the ground of non payment of tax by
the supplier and that default in payment of taxes shall be recovered from the
supplier except in those cases where the supplier is found to be missing or
closure of business by the supplier or supplier does not have adequate assets. In
the present case, the supplier being a registered dealer, it is submitted that it
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W.P.(MD)No.11035 of 2023
does not fall within the exception laid down vide the above press release.
5. On receipt of the above reply, the respondent authorities observed that
as far as registration certificate of JB Traders they are supposed to be doing
business activity in 5282a/C1, 10th Street, Ram Nagar, North Extension,
Madipakkam, Chennai. The said place of business was inspected by the
Department of Commercial Taxes, Government of Karnataka. During the
surprise inspection, it was found that the taxable persona viz., JB Traders was
not doing any business in the said premises and thus, the petitioner herein could
not have received any goods and thus, the petitioner was not eligible to claim
Input Tax Credit.
6. Pursuant thereto, a show cause notice dated 05.01.2023 was issued
through GSTR portal and registered post which was not responded to by the
petitioner. An opportunity of personal hearing was also granted and the
petitioner was called upon to appear on 13.02.2023 and 08.03.2022 vide notices
dated 08.02.2023 and 03.03.2023 respectively. However, the petitioner could
not avail the opportunity of personal hearing nor file any reply and no records
were also produced.
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W.P.(MD)No.11035 of 2023
7. In view thereof, the proposals stood concluded and the present Writ
Petition is filed against the order of the above assessment. It is trite law that
Input Tax Credit is in the nature of concession and conditions attached thereto
ought to be strictly complied with. Importantly, Section 16 of the Act interalia
provides the following conditions for a recipient / taxable person to be entitled
to Input Tax Credit viz.,
a) the claimant must be in possession of tax invoices or debit note.
b) the claimant must have received the goods or services or both.
c) the tax charged in respect of the supply with regard to which Input Tax
Credit is claimed ought to be paid to the Government by the supplier.
d) the supplier must have furnished the return under Section 39 of the Act
These conditions ought to be strictly complied with.
8. It is stated in the impugned order that the supplier viz., JB Traders
being non existent, the transactions cannot be genuine but only fictitious and
any claim of Input Tax Credit on the basis of the fictitious transactions cannot
be sustained. The question whether a supplier is existing or not, is a question of
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W.P.(MD)No.11035 of 2023
fact and a disputed question of fact which ought to be decided on the basis of
evidence adduced by both assessee as well as the revenue. The examination of
such disputed question of facts is foreign to jurisdiction under Article 226 of the
Constitution. The petitioner having not even availed the opportunity offered by
filing, its reply nor attending the personal hearing and making good its
submission cannot now question the order of assessment on the ground that the
same is a non speaking order. As a matter of fact, the assessment order deals
with each paragraph of the objection filed by the petitioner, thus the above
contention is again without merit.
9. In view thereof, the challenge to the order of assessment stands
rejected. It is open to the petitioner to file an appeal within 2 weeks from the
date of receipt of a copy of this order, subject to compling with all conditions
relating to appeal, including pre-deposit, if any. If such appeal is filed within the
stipulated period i.e., 2 weeks from the date of receipt of copy of this order. The
same would be entertained and disposed of in accordance with law after
affording the petitioner a reasonable opportunity of hearing.
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W.P.(MD)No.11035 of 2023
10. Recording the same, the writ petition stands disposed of. No Costs.
Consequently, connected miscellaneous petition is closed.
30.10.2024
NCC:yes/no
Index:yes/no
Internet:yes/no
Nsr
To:
1.The Commissioner of Commercial Taxes,
O/o. The Principal and Special Commissioner of
Commercial Taxes,
Ezhilagam, Chepauk,
Chennai – 600 005.
2.The Deputy Commercial Tax Officer/
The Deputy State Tax Officer – 2,
Dindigul Town Assessment Circle,
Commercial Taxes Office,
Deputy Collector Office Road,
Dindigul – 624 201.
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W.P.(MD)No.11035 of 2023
MOHAMMED SHAFFIQ, J.
Nsr
W.P.(MD)No.11035 of 2023
30.10.2024
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