2026-VIL-230-GSTAT-LCK
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SGST Tribunal

GST - ITC on invoices of a non-existent supplier - Denial of Input Tax Credit on invoices of a supplier found non-existent - Burden of proof under Section 155 and actual receipt of goods under Section 16(2)(b) of CGST Act, 2017 - Respondent availed ITC on invoices issued by a supplier found non-existent at its declared place of business - Demand under Section 74 on the allegation that only invoices were generated without movement of goods - FAA quashed the demand by confining itself to the fact that the supplier's registration was active on the portal – Dept contended that FAA failed to examine actual movement and receipt of goods - Whether the orders of the adjudicating authority and FAA are sustainable without examining the documentary evidence of movement of goods and the fulfilment of conditions under Section 16 - HELD - Section 16(2)(b) prescribes actual receipt of goods or services as an essential condition and Section 155 places the burden of proving eligibility on the person claiming ITC. The conditions under Section 16(2) are to be read conjointly; the condition of payment of tax under Section 16(2)(c) cannot be treated as a substitute for actual receipt of goods under Section 16(2)(b) - Genuineness of the transaction and actual physical movement of goods are a sine qua non and the purchasing dealer may discharge the burden by producing tax invoices, e-way bills, transport receipts and other proof of receipt of goods - Active registration of the supplier, issuance of invoices and payment through banking channels cannot, in isolation, conclusively establish receipt of goods when genuineness of the supply is specifically disputed. Equally, non-availability of the supplier at its declared place of business during a subsequent investigation does not by itself conclusively establish that no goods were supplied. The Order-in-Original did not consider the invoices and e-way bills uploaded by the Respondent nor assign reasons for finding them insufficient - FAA confined itself to the active status of the supplier's registration, which is relevant but not determinative, and did not make an independent and comprehensive examination of the claim - The Order-in-Appeal and the Order-in-Original are set aside and the matter is remanded to the adjudicating authority for fresh adjudication with specific and reasoned findings after giving the Respondent an effective opportunity to produce documents on movement of goods - The appeal is allowed by way of remand - Maintainability of second appeal filed by the Department where the disputed ITC is below the monetary limit prescribed in the Circular - Appellant filed second appeal against the order of FAA which had quashed the demand raised on ITC availed on invoices of a supplier found non-existent - Appellant submitted that, notwithstanding the monetary limit under Circular No. 207/1/2024-GST dated 26.06.2024, the matter falls within the exclusion under Para 4(iv)(e) as it concerns a recurring issue involving interpretation of the Act and relied on Para 4(vi) subject to the opinion of the Commissioner - Whether the appeal can be heard on merits notwithstanding the monetary limit - HELD - The appeal involves interpretation and application of Section 16(2)(b) of the UPGST Act, 2017, regarding admissibility of ITC where the supplier was found to be non-existent. It therefore raises a recurring question concerning genuineness of supplies and eligibility for ITC and is not confined to the disputed ITC. The Bench considered the opinion of the Commissioner UPSGST and held that the second appeal must be heard and decided on merit in the interest of revenue - The appeal is entertained and decided on merits.
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