In a recent ruling, the Madras High Court criticised the GST department for not closely examining the e-invoice and e-way bills. The order was set aside for reconsideration. According to the court, the department drew the conclusion without proper examination.
The bench of Justice Senthilkumar Ramamoorthy, reviewing the GST impugned order stated that “the respondent did not closely examine the documents submitted by the petitioner, such as invoices, e-way bills, etc. Instead, a conclusion was drawn that the petitioner failed to establish movement of goods. In these circumstances, re-consideration is necessary.”
M. R. V. Traders, represented by its Proprietor Sivakumar, the assessee, filed a writ petition challenging GST order in Original on the ground of non consideration of the assessee’s reply. The assessee received a show cause notice dated 02.11.2022 regarding the alleged wrongful availing of GST Input Tax Credit ( ITC ) for purchases from Mahalakshmi Traders, Pollachi. Responding to this notice, the petitioner replied on 08.12.2022. Subsequently, the contested order dated 17.08.2023 was issued.
According to the assessee’s counsel, the assessee submitted purchase invoices, e-way bills, bank statements, and other relevant documents to substantiate the genuineness of the purchases. However, these documents were allegedly not examined before reversing the GST ITC.
As a preemptive measure, and based on instructions, the counsel stated that the assessee agrees to remit 10% of the disputed GST demand as a condition for reconsideration.
However, the GST department’s counsel on the order side submitted that principles of natural justice were complied with by issuing intimation, show cause notice and by issuing multiple reminders in respect of personal hearing.
He also submitted that the claim of Input Tax Credit was rejected because the petitioner failed to establish movement of goods.
The High court noted that the respondent did not thoroughly examine the documents submitted by the petitioner, such as invoices and e-way bills. Instead, a conclusion was hastily drawn that the petitioner failed to substantiate the movement of goods. Thus, reconsideration of the matter is necessary.
Consequently, the GST order was set aside on a pre-deposit condition of 10%. The case was remanded for reconsideration, during which the petitioner was allowed to submit additional documents, if any. With the assessment order being annulled, any bank attachments were also lifted by the Court.
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