Merely producing tax invoices, e-way bills, and banking channel payments is not sufficient to claim ITC on Goods Purchased in GST.

The Hon’ble Allahabad HC In the case of M/S ANIL RICE MIlL VERSUS STATE OF U.P. AND 2 OTHERS  Writ Tax No. - 886 of 2023 order dated 14-08-2024 followed the Principles laid down by Hon’ble SC State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited [2023 (3) TMI 533 - SUPREME COURT] – case decided for VAT Regime,  and held that

 Merely producing tax invoices, e-way bills, and banking channel payments is insufficient. Proof of actual physical movement of goods, genuineness of transportation, payment of freight charges, acknowledgment of delivery, toll receipts, and filing of GSTR 2A is necessary. The Supreme Court has held that the primary burden is on the dealer to furnish details like selling dealer, vehicle number, freight payment, delivery acknowledgment, tax invoices, and payment particulars to establish actual goods movement. Submitting only invoices, e-way bills, or payment details is inadequate. Consequently, the High Court dismissed the writ petition, upholding the orders denying ITC for non-compliance with statutory conditions.

In the case of

M/S ANIL RICE MIlL VERSUS STATE OF U.P. AND 2 OTHERS  Writ Tax No. - 886 of 2023, The Hon’ble Allahabad HC in an order dated 14-08-2024 held that

Admittedly, the scheme of input tax credit is being introduced with an object to avoid cascading effect of tax. The purchasing dealer can avail the input tax credit on tax paid on its purchase whereas manufacturer can avail the same on purchase of its raw material used for manufacturing or selling of its final product which will avoid double taxation. The benefit of concession / I.T.C. under the tax statute can be availed only on fulfilment of certain conditions or restrictions as stipulated under the Act. In the event of breach of any of the conditions as enumerated under the Act, no benefit can be conferred to the dealer.

Section 16 (2) further provides that no registered dealer shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless the conditions mentioned therein is fulfilled. In other words, Section 16 specifically provides the registered dealer to fulfil the conditions as provided therein for availment of input tax credit.

In the case in hand, the petitioner has only brought on record the tax invoices, e-way bills, and payment through banking channel, but no such details such as payment of freight charges, acknowledgement of taking delivery of goods, toll receipts and payment thereof has been provided. Thus in the absence of these documents, the actual physical movement of goods and genuineness of transportation as well as transaction cannot be established and in such circumstances, further no proof of filing of GSTR 2 A has been brought on record, the proceeding has rightly been initiated against the petitioner.

The Apex Court in the case of State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited [2023 (3) TMI 533 - SUPREME COURT], while considering the pari materia of section 70 of the Karnataka Value Added Tax Act, 2003, where the burden was upon the dealer to prove beyond doubt its claim of exemption and deduction of ITC - In the said judgement Hon’ble the Apex Court has held that primarily burden of proof for claiming the input tax credit is upon the dealer to furnish the details of selling dealer, vehicle number, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. to prove and establish the actual physical movement of the goods. Further by submitting tax invoice, e-way bill, GR or payment details is not sufficient.

Thus, no interference is called for by this Court in the impugned orders - the writ petition fails and is dismissed.