GST Update

 Desk of CA. Praveen Sharma – 887 Series (CAPS) 
Allahabad High Court in the case of Saniya Traders

The petitioner challenged orders reversing ITC and demanding tax, interest, and penalty for June 2021, stating that all purchases were genuine and tax-paid.

The petitioner had purchased scrap batteries from a registered dealer, supported by a valid tax invoice, e-way bill, and bank payment.

The seller had filed GSTR-1 and GSTR-3B for the period, and the tax on the petitioner’s invoice was duly deposited, reflected in the petitioner’s GSTR-2A.

Despite this, the revenue treated the purchase as fictitious on the basis of a Bihar investigation alleging non-existent suppliers, even though there was no specific adverse finding against the petitioner’s supplier for this transaction.

The appellate authority upheld ITC reversal without properly examining the documents showing tax payment and the seller’s valid registration on the transaction date.

The Court held that when the supplier is registered on the date of supply and the tax has reached the government, ITC cannot be denied merely because the seller’s registration was later cancelled.

The Court relied on earlier judgments such as Shakti Kiran India, Solvi Enterprises, and Khurja Scrap Trading, which held that bona fide purchasers cannot be penalised when tax has already been paid to the department.

Since all evidence supported the petitioner, the Court quashed the ITC reversal as unsustainable.

LINK:CA. Praveen Sharma on Linkedin

Regards
CAPS