Afzal Husain Altaf Husain Saiyed Prop. Of M/S. Devine Impex vs. Union Of INDIA Thr The Office Of Prin. Commissioner Of Central Tax, Mumbai Central And Ors
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The Petitioner, Afzal Husain Altaf Husain Saiyed, proprietor of M/s. Devine Impex, filed a writ petition challenging an order dated 24th May 2024, which confirmed an earlier order dated 11th January 2024 canceling the Petitioner's GST registration. The Petitioner approached the High Court as the GST Tribunal was not functioning. The cancellation was based on the Petitioner's alleged failure to provide documents to support Input Tax Credit (ITC) claims, with major suppliers being found non-existent upon physical verification. The Petitioner argued that the cancellation was wrongly invoked under Section 29(2)(e) of the CGST Act, 2017, as the registration was not obtained by fraud, willful misstatement, or suppression of facts, and denied admissions regarding fake ITC and invoices. The Respondents contended that the Petitioner failed to provide supporting documents, despite a previous remand for this purpose, and that the cancellation was under Section 29(2) of the CGST Act, 2017, read with Rule 21(b) and (e) of the CGST Rules, 2017.
Held
The Court held that the Petitioner's submission that the cancellation was solely under Section 29(2)(e) of the CGST Act, 2017, was incorrect. The Order-In-Original clearly indicated that the cancellation was based on the Petitioner violating Section 16 by availing ITC without genuine transactions, as major suppliers were found non-existent. The Court found that the Order-In-Original invoked Section 29(2) of the CGST Act, 2017, read with Rule 21 of the CGST Rules, 2017, specifically referencing provisions related to fake Input Tax Credit and non-conducting of business from the registered address, which aligns with Section 29(2)(a) and Rule 21. The Appellate Authority's findings, supported by paragraphs 14, 16, and 17 of its order, confirmed that the Petitioner failed to produce documentary evidence (invoices, bank statements, e-way bills) to substantiate their ITC claims and the genuineness of their transactions. The Court noted the reliance on the Supreme Court's observation in State of Karnataka vs Ecom Gill Coffee Trading Pvt Ltd, which places the burden of proving the correctness of ITC claims on the purchasing dealer, a burden the Petitioner failed to discharge. The Court found concurrent findings of fact by both authorities, no perversity, and thus no interference was required. The Petitioner's undertaking to produce documents, given in previous proceedings, was not fulfilled.
Key Issues
1. Whether the cancellation of the Petitioner's GST registration under Section 29(2)(e) of the CGST Act, 2017, is legally sustainable, given the Petitioner's contention that the registration was not obtained by fraud, willful misstatement, or suppression of facts, and that the Petitioner denied admissions regarding fake ITC and invoices? Petitioner's argument: The Petitioner argued that Section 29(2)(e) of the CGST Act, 2017, was not attracted as the registration was not obtained through fraudulent means. Therefore, the orders canceling the registration should be quashed. Respondents' argument: The Respondents argued that the Petitioner failed to provide supporting documents for ITC claims, even after a remand. They further contended that the cancellation order referred to Section 29(2) of the CGST Act, 2017, and not specifically Section 29(2)(e), and that the Petitioner's case fell under Rule 21(b) and (e) of the CGST Rules, 2017, for cancellation of registration due to fake ITC and non-conducting of business from the registered address. They also argued that the Petitioner could not benefit from the court's order by not filing documents.
Sections Cited
Section 29(2), Section 29(2)(e), Section 16, Rule 21, Rule 21(b), Rule 21(e), Section 70, Section 155
AI-generated summary — verify with the full judgment below
12-ASWP-17770-2024.DOC Shephali IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURI ICTION WRIT PETITION NO. 17770 OF 2024 Afzal Husain Altaf Husain Saiyed Prop. of M/s. Devine Impex …Petitioner Versus Union of India through The Office of Prin. Commissioner of Central Tax, Mumbai Central & Ors …Respondents Mr Pradeep Purohit, i/b PD Jain & Co, for the Petitioner. Mr Karan Adik, with Deshpande & Parimal Wagh, for the Respondents. CORAM M.S. Sonak & Jitendra Jain, JJ. DATED: 24th June 2025. PC:-
This Petition challenges an order dated 24th May 2024 passed in Appeal whereby the original order dated 11th January 2024 canceling the Petitioner’s registration has been confirmed.
The Petitioner has approached this Court since the GST Tribunal is not functioning. 24th June 2025 SHEPHALI SANJAY MORMARE SANJAY MORMARE Date: 2025.06.25 10:59:35 +0530
12-ASWP-17770-2024.DOC
Mr Purohit, learned counsel for the Petitioner submits that the registration has been cancelled under Section 29(2) (e) of the CGST Act, 2017 which is not attracted in the present case since at the time of obtaining the registration, the same was not obtained by means of fraud, willful misstatement or suppression of facts. He further submits that Petitioner has denied the admissions in the statements made before the authorities on issuing the fake ITC and Invoices. He, therefore, submits that since the provisions of Section 29(2)(e) of the CGST Act, 2017 are not attracted, the orders passed by both the authorities are required to be quashed and set aside.
Mr Adik, learned counsel for the Respondents, submits that the Petitioner has miserably failed to provide any documents in support of his claim for availing the ITC although in the first round of litigation before this Court, the matter was remanded for this very reason. In any case, he submits that the Order-In-Original (“OIO”) whereby the registration is cancelled, refers to Section 29(2) of the CGST Act, 2017 and not Section 29(2)(e) and, therefore, the submission made by the Petition on this count is incorrect. He submits that as per Rule 21 of the CGST Rules, 2017, various circumstances have been prescribed for cancellation of the registration and in the instant case, the Petitioner’s case falls under Rule 21(b) and (e) of the CGST Rules, 2017. He further submits that the Petitioner who has taken benefit of the order of this Court on the ground that he will produce all the documents cannot be heard today that although he has not 24th June 2025
12-ASWP-17770-2024.DOC filed all the documents, the present Petition should be entertained and the orders quashed.
We have heard learned counsel for the Petitioner and the Respondents. The Order-In-Original whereby the registration of the Petitioner is cancelled, specifically records that the Adjudicating Authority has verified major suppliers and found to be non-existent on physical verification of their principal place of business. Therefore, the Adjudicating Authority has come to a conclusion that the Petitioner has violated the provisions of Section 16 since the ITC benefit is taken without there being any genuine transactions of buying and selling. The Order-In-Original does not refer to any sub- clauses of Section 29(2), but it only refers to Section 29(2) of the CGST Act, 2017 read with Rule 21 of CGST Rules 2017. We, therefore, do not accept the submission of the learned counsel for the Petitioner that only provisions of Section 29(2) (e) are invoked. On a reading of paragraphs 6 and 7 of the Order-In-Original, it is very clear that the provisions of Section 29(2) (a) are invoked read with Rule 21, which deals with fake Input Tax Credit and non-conducting of the business from the address mentioned to the GST Authorities.
The Appellate Authority after considering the submissions and the standard operating procedure for adjudicating fake Invoice cases has given a categorical finding in paragraphs 14, 16 and 17, which read as under: 24th June 2025
12-ASWP-17770-2024.DOC “14. The appellant at appeal stage has not submitted any documentary evidence to substantiate their claim i.e. invoices, bank statement, e-way bill etc. Further in the present case the appellant has also failed to follow the conditions of movement of goods. In absence of the same the movement of the goods delivered cannot be ascertained. The appellant has not fulfilled requirement of law. Therefore, revocation of GST number without proper scrutiny like movement of goods is the risk of encashment of ITC availed on fake invoices. Therefore, due diligence for verification of correctness of the ITC availment and utilization is to be done.
To prove the genuineness of their sale and purchase, the appellant should have produced relevant documents pertaining to their business especially with regards to the movement and receipt of goods. In the above case, Hon. Supreme Court has observed that the provisions of Section 70, quoted hereinabove, in its plain terms clearly stipulate that the burden of proving that the ITC claim is correct lies upon the purchasing dealer claiming such ITC. Merely because the dealer claiming such ITC claims that he is a bona fide purchaser is not enough and sufficient. Such a burden of proof cannot get shifted to the revenue. Mere production of the invoices or the payment made by cheques is not enough and cannot be said to be discharging the burden of proof cast under Section 70 the KVAT Act, 2023. 17. The appellant during proceedings didn’t produce any of the above said documents. Therefore, in view of discussions and findings at above mentioned paras, the appeal filed by the appellant is liable to be rejected.” 7. 12-ASWP-17770-2024.DOC Ltd1 and the said decision read with Section 155 of the CGST Act requires the Petitioner to discharge the onus of proving the claim which in the instant case, the Petitioner has miserably failed.
In our view, no interference is required by this Court since there is no documentary evidence furnished before the authorities in support of the claim that the transactions of purchase and sale are genuine. There are concurrent findings of fact by both the authorities that on physical verification of the supplier, they were found to be non-existence and, therefore, consequently, the ITC claim was bogus. No perversity is brought to our notice in the impugned order.
In the light of above, the Petition is dismissed. There will be no order as to costs. (Jitendra Jain, J) (M. S. Sonak, J) { 1 2023 (72) G.S.T.L. 134 (S.C), Civil Appeal No. 230 of 2023 with C.A. Nos. 231-232 & 216-217 of 2023, decided on 13.03.2023. 24th June 2025
Reproduced from the public record of the Bombay High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.