Raj Metal Industries And Anr vs. Jt Commissioner,Sales Tax, Large Taxpayer Unit,Corporate Div And Ors

Held

The Court held that based on the recorded facts and subject to further verification, it could not be definitively stated that the petitioners failed to comply with their statutory obligations regarding transaction verification. The Court considered the submissions of both parties and the available records. It found that the issue required further examination of the genuineness of the transactions, the timing of the transactions relative to supplier registration cancellation, and the petitioners' compliance with statutory obligations for supplier verification. Consequently, the Court decided to remand the cases to the respondents. The respondents are directed to reconsider the petitioners' entitlement to ITC by examining supporting documents for transaction genuineness, verifying payments to suppliers, checking if transactions occurred before or after supplier registration cancellation, and assessing the petitioners' compliance with supplier verification obligations. If purchases are found genuine and supported by valid documents, and transactions occurred before registration cancellation, and considering relevant judgments, petitioners would be granted ITC. The respondents must pass a reasoned order after providing a hearing opportunity within eight weeks.

Facts

The petitioners, M/s LGW Industries Limited & Ors., Anmol Industries Ltd. & Anr., Surya Alloy Industries Ltd. & Anr., Raj Metal Industries & Anr., and Victoria Global & Anr., are aggrieved by notices issued by GST authorities. These notices refused the benefit of input tax credit (ITC) on purchases made from certain suppliers and demanded payment of penalty and interest. The respondents contended that the suppliers were fake, non-existent, used fake documents for bank accounts, and their registrations were cancelled retrospectively. The petitioners argued that their transactions were genuine, supported by documents, and they had exercised due diligence, relying on the suppliers' valid registration status on the government portal at the time of transactions. They also stated that payments were made through banking channels and invoices were available on the GST portal in Form GSTR-2A.

Key Issues

1. Whether the petitioners, as purchasers, are entitled to the benefit of input tax credit (ITC) when the suppliers from whom they purchased goods are subsequently found to be fake or non-existent, and their registrations have been cancelled retrospectively, despite the petitioners having exercised due diligence and relied on the suppliers' valid registration status on the government portal at the time of the transactions, and having made payments through banking channels? (Question of mixed law and fact, turning on Section 16(2)(c) of the CGST/WBGST Act and principles of natural justice). Petitioner's Arguments: The transactions were genuine and valid, supported by all required documents. Petitioners exercised due diligence and verified suppliers' genuineness, whose registrations were valid on the government portal at the time of transactions. They have limitations in ascertaining supplier validity and have done what was possible. Payments were made through banks, not cash. They cannot be penalized unless collusion is established. Invoices were available on the GST portal in Form GSTR-2A. Revenue's Arguments: The suppliers were fake and non-existent, used fake documents for bank accounts, and their registrations were cancelled retrospectively. Petitioners failed to verify the genuineness and identity of the suppliers before transacting.