2026-VIL-250-GSTAT-LCK
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  2. 2026-VIL-250-GSTAT-LCK

SGST Tribunal

GST - Eligibility to Input Tax Credit on the strength of invoices, e-way bills, transport documents, weighment slips, stock ledger and banking channel payments - Actual receipt of goods under Section 16(2)(b) and burden of proof under Section 155 of the CGST Act, 2017 - Appellant availed and utilised Input Tax Credit on invoices of two suppliers - Respondent relied on physical verification showing that the suppliers were non-existent - Appellant contended that the documents and banking channel payments established genuine transactions and that the invoices were reflected in GSTR-2A - Whether the documents furnished are sufficient to allow the buyer Input Tax Credit when physical movement and receipt of goods are in doubt - HELD - The issue is whether goods actually travelled and were received, and filing of returns and payment of money are secondary. The conditions of Section 16(2) are cumulative, and the issue of actual receipt under clause (b) is distinct from payment of tax under clause (c), which cannot be treated as a substitute - Section 155 places the burden of proving eligibility on the person claiming credit. Mere production of invoices, e-way bills or proof of payment is not sufficient. The claimant must prove actual physical movement by furnishing vehicle details, freight payment and acknowledgement of delivery – In the present case, the reports showed vehicles not traceable in the records, a vehicle with carrying capacity far below the weight declared, vehicles without valid permit, insurance or fitness - The suppliers having been held bogus and non-existent, the preponderance of probability showed that there was no physical supply, so that the supporting documents are fudged papers giving a legitimate colour to fake transactions. Appearance of invoices in GSTR-2A, a system generated statement, does not establish supply - The Appellant failed to discharge the burden, the Input Tax Credit is not admissible - The appeal against the demand is rejected - Invocation of Section 74 of the CGST Act, 2017 on the basis of investigation material against suppliers - Applicability of decisions denying Input Tax Credit denial to bona fide purchasers for supplier default - Appellant contended that Section 74 cannot be invoked on an intelligence report, suspicion or adverse information on suppliers without establishing fraud, wilful misstatement or suppression with intent to evade tax - Whether the transactions are fraudulent so as to sustain the invocation of Section 74 and whether the decisions relied upon assist the Appellant - HELD - The Department did not proceed merely on the ground that the suppliers were later unavailable or their registrations cancelled, but on specific verification of transport particulars and other tangible material establishing that the suppliers were bogus and non-existent and that the goods never travelled. Once goods have not travelled, the entire exercise is a paper transaction undertaken to avail Input Tax Credit, which is a fraudulent scheme to deprive the Government of revenue - Input Tax Credit is a conditional statutory benefit and not a vested right and the concession must be availed in strict compliance with the statutory conditions - The case stems from fraudulent transactions where goods never travelled and the suppliers were proven bogus - The contentions on Section 74 are rejected, and the issues raised is answered against the Appellant - Leviability of penalty under Section 122 read with Section 74 of the CGST Act, 2017 and enhancement of penalty by the FAA - Section 75(13) and Circular No. 171/03/2022-GST - Adjudicating authority imposed penalty, and the FAA enhanced it to an amount equal to the Input Tax Credit wrongly availed without discussing the reasons - Appellant contended that penalty under Section 122 cannot survive without establishing the specific contravention and without reasonable opportunity of hearing - Whether penalty under Section 122 can be sustained when Section 74 was invoked - HELD - The FAA enhanced the penalty without following the principles of natural justice. Neither the order of the adjudicating authority nor that of the FAA discussed why penalty under Section 122 is imposed when Section 74 was invoked. Section 75(13) provides that where penalty is imposed under Section 73 or Section 74, no penalty for the same act or omission shall be imposed on the same person under any other provision of the Act - The authorities should have spelt out reasons for the penalty, and in the absence of cogent reasons, the imposition of penalty under Section 122 read with Section 74 cannot be sustained - The penalty imposed in both orders is set aside, and the matter is remanded to the adjudicating authority for redetermination of the penalty keeping in view Section 75(13).
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