Tax Invoices and Cheque payment are not sufficient to claim ITC: SC Ruling

In a important ruling, Supreme Court has reversed the order of High Court in which HC allowed the taxpayer's ITC by relying on tax invoices and cheque payments as a material proof.

"A dealer claiming ITC has to prove beyond doubt the occurrence of the actual transaction and the actual physical movement of the goods." - SC Held

Though the said ruling is under VAT Regime, however the ruling may have significant impact in GST Regime also. GST authorities may now ask for additional documents to substantiate input tax claims by placing reliance on the principles laid down in the above ruling. However, apart from invoice and proof of payment, documents such as E-waybill and E-Invoice, could help in substantiating the genuineness of the  transaction under the GST regime.

The SC allowed tax authorities' appeal against the High Court order.

Supreme Court pronounced the order of HC as “erroneous” and said that, - “for claiming ITC, genuineness of the transaction and actual physical movement of the goods are the sine qua non and the aforesaid can be proved only by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc.”

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