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ITC cannot be denied by a cursory order by simply stating that 'tax payer has claimed ITC using fake invoices, hence ITC is disallowed': High Court

The petitioner is registered as a dealer under the provisions of the GST Act. 

According to the petitioner, all materials necessary to substantiate its request for unblocking of the credit have been supplied to the respondent. However, the case of the respondent appears to be that the claim of ITC is itself bogus insofar as there was no actual movement of the goods at all. To this end, a show cause notice has been issued on 30.03.2021 and the petitioner has been afforded an opportunity of personal hearing on 07.04.2021. Admittedly, this opportunity has not been availed by the petitioner, who cites the lock-down on account of the on-going pandemic.

The impugned order rejects the claim for ITC simply stating that 'the tax payer has claimed ITC using fake invoices. Hence the corresponding ITC is disallowed'. The claim of ITC is one that would have to be decided based on documents that are supplied by an assessee as well as material collated/available with the Assessing Officer and not by way of a cursory order, as has been done in the present case.

The representation of the petitioner dated 18.02.2021 encloses several documents that must be taken into account in coming to a decision as to whether the petitioner is entitled to succeed or not, and this has to be done by way of a reasoned, speaking order. The impugned order hardly meets the standards to be followed in the framing of a assessment and is hence set aside.

The petitioner, seeing as it has not filed a reply to the show cause notice dated 30.03.2021, shall appear before the authority on Monday the 16th August of 2021 with its reply to the show cause notice and without expecting any further notice in this regard. After hearing the petitioner and considering the reply as well as the documents filed/to be filed, the authority shall decide the claim of ITC by way of a speaking order, in accordance with law.

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Aug 20, 2021

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