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Petitioner cannot be denied GST Refund because of allegations of any fake credit availed by it’s supplier: High Court

High Court held that the allegations of any fake credit by supplier cannot be a ground for rejecting the petitioner’s refund application unless it is established that the petitioner has not received the goods or paid for them.


Petitioner had filed its refund application seeking refund of the unutilized ITC of Rs.72,03,961/-. The refund sought was in respect of goods exported by the petitioner.

The petitioner’s application was not processed by revenue as the supplier from whom the petitioner had purchased the goods had allegedly received fake invoices from its suppliers.

A Show cause notice was issued by respondent to the petitioner proposing to reject the petitioner’s refund applications.

This show cause notice indicated that the supplier of petitioner was being investigated by DGGI in connection with fake invoices allegedly issued by it.

The petitioner submitted that he was not concerned with any allegation against its supplier as the purchases made by it were genuine and against genuine invoices. 

Respondent rejected the refund applications, essentially, on the same grounds as stated in the show cause notice.

Appellate Authority:

The petitioner appealed the said orders rejecting its refund applications, which was dismissed by the impugned order.

The Appellate Authority held that although the petitioner was in possession of the tax invoices, it could not be said that the petitioner had received the goods. Therefore, one of the conditions as stipulated in Section 16(2) of CGST Act, 2017 – the taxpayer has received the goods or services or both – was not satisfied. The Appellate Authority concluded that the present case was one of “goodless supply on the strength of fake invoices”.

Held by High Court:

It is clear from the above that the petitioner’s refund applications were rejected on a mere apprehension that its supplier had issued fake invoices. T.......
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Mar 14, 2023


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By: Ajit Agarwal | Dt: Mar 17, 2023

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