Form GST APL-01

[See Rule 108(1)]

Appeal to Appellate Authority

In the Court of Additional/Joint/Special Commissioner

(Appeal) …., Delhi Goods and Services Tax (GST)

M/s Raja Ram and Associates

Through their Partner Mr. Raja Ram
(Appellant)

Versus

State Tax Officer Class-II/AVATO

Ward-72, Zone-4, Delhi GST
(Respindent)

GSTIN/TEMPORARY ID/UIN
1 07A….W
Legal name of the appellant
2 Raja Ram
TRADE NAME, IF ANY
3 M/s Raja Ram & Associates
Address
4 Plot No. 1/1, Shakarpur , Laxmi Nagar,
East Delhi, Delhi-110092
Order No &Date ZD…..12T & 25th-Dec-2023
5
Designation of the officer passing the Sales Tax Officer Class II/ AVATO
6
order appealed against Ward 72:Zone 4:Delhi
Date of communication of the order 25th-Dec-2023
7
appealed against
Name of the authorized representative
8 Raja Ram
Details of the case under dispute
9 Assessment/Scrutiny of Returns
Brief issue of the case under dispute
9(1)
Description and classification of N/A
9(2)
goods/ services in dispute
Period of dispute
9(3) July 2017 - Mar 2018
Amount under dispute:
9(4) 25,00,000/-

Page 1 of 27
 Whether the appellant wishes to be
10 Yes
heard in person
Statement of facts
11 As per Annexure A
Grounds of appeal
12 As per Annexure B
Prayer
13 As per grounds of appeal

14. Amount of demand created, admitted and disputed –

Particul
Particulars CGST SGST IGST Cess Total Overall
ar of
Amount total
demand
Amount
/refund
a) Tax/
Amount 5,00,000 5,00,000 0 0 10,00,000 25,00,000
Cess
of
demand b)
5,00,000 5,00,000 0 0 10,00,000
created Interest
(A) c)
2,50,000 2,50,000 0 0 5,00,000
Penalty
d) Fees
0 0 0 0 0
e) Other
0 0 0 0 0
charges
a) Tax/
Amount 0 0 0 0 0
Cess
of
demand
admitte b) 0 0 0 0 0
d (B) Interest
c)
0 0 0 0 0
Penalty
d) Fees
0 0 0 0 0
e) Other
0 0 0 0 0
charges
a) Tax/
Amount 0 0 0 0 0 0
Cess
of
demand b)
0 0 0 0 0
dispute Interest
d (C) c)
0 0 0 0 0
Penalty
d) Fees
0 0 0 0 0
e) Other
0 0 0 0 0
charges

15. Details of payment of admitted amount and pre-deposit: - Rs.0 /-

(a) Details of payment required
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 CGST SGST IGST Cess Total
Amount
Particulars
a) Admitted Amount
Tax/Cess 0 0 0 0 0

Interest 0 0 0 0 0

Penalty 0 0 0 0 0

Fees 0 0 0 0 0

Other 0 0 0 0 0
Charge
b) Pre Deposit (10%
Tax/Cess 0 0 0 0 0
of disputed
Amount)

(b) Details of payment of admitted amount and pre-deposit (pre-deposit

10.00% of the disputed tax and cess):
(b.1) Detail of payment of admitted amount - NIL
S. No. Description Paid through Debit Amount of tax paid
cash/credit Entry
ledger No
CGST SGST IGST Cess

1 2 3 4 5 6 7 8

1 IGST Cash Ledger 0 0 0 0 0

Credit Ledger 0 0 0 0 0

2 CGST Cash Ledger 0 0 0 0 0

Credit Ledger 0 0 0 0 0

3 SGST Cash Ledger 0 0 0 0 0

Credit Ledger 0 0 0 0 0

4 Cess Cash Ledger 0 0 0 0 0

Credit Ledger 0 0 0 0 0

(b.2) Detail of payment of pre deposit (pre-deposited 10.00% of the disputed

tax and cess) -

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S. Description Paid through Debit Amount of tax paid
No. cash/credit ledger Entry No
IGST SGST IGST Cess

1 2 3 4 5 6 7 8

1 IGST Cash Ledger 0 0 0 0 0

Credit Ledger 0 0 0 0 0

2 CGST Cash Ledger 0 0 0 0 0

Credit Ledger 0 0 0 0 0

3 SGST Cash Ledger 0 0 0 0 0

Credit Ledger 0 0 0 0 0

4 Cess Cash Ledger 0 0 0 0 0

Credit Ledger 0 0 0 0 0

(c) Interest, penalty, late fee and any other amount payable and paid;

S. Description Amount Payable Debit Amount Paid

No. Entry
IGST CGST SGST Cess No IGST CGST SGST Cess

1 2 3 4 5 6 7 8 9 10 11

1 Interest 0 0 0 0 NA 0 0 0 0

2 Penalty 0 0 0 0 0 0 0 0 0

3 Late fees 0 0 0 0 NA 0 0 0 0

4 Others 0 0 0 0 NA 0 0 0 0

Whether appeal is being filed after the prescribed

16 Yes
period
If “Yes” in item 16
17
Period of delay
17(a)
Reasons for delay
17(b)

Verification

Page 4 of 27
 I Raja Ram, the Partner of M/s Raja Ram & Associates, hereby solemnly
affirm and declare that the information given here in above is true and
correct to the best of my knowledge and belief and nothing has been
concealed there from.

Thanks & Regards

For M/s Raja Ram & Associates

Raja Ram
(Partner)

Annexure A: Statement of Facts

1. STATEMENT OF FACTS

1.1. We, M/s Raja Ram & Associates hereby is filing present appeal against the
impugned order which was issued under Section 74 vide Order No.
ZD….L on dated 25-12-2023, for the Tax Period 2017-18, order is
enclosed as Annexure-1.

1.2. The appellant has been served a Show Cause Notice (hereinafter
referred as SCN) in Form DRC 01 and Assistant Commissioner made
an allegation that “Availed Inadmissible and Excess ITC” Reference
Number of SCN is ZD,,,12T, on dated 23rd August 2023 under section
73 of Delhi/State Goods and Service Tax Act 2017.

1.3. On 23.09.2023, the Sales Tax Officer Class II, Delhi Charge issued a
notice in the Form GST DRC-01 through GST Portal which have

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 raised the demand of the Tax and other dues total amounting
Rs.25,00,000.00/-, required to be paid by the firm.

1.4. In the form of a query, they have brought to our attention a noted
incongruity, wherein a perceptible discrepancy has been identified
between the Input Tax Credit (ITC) as reported in the Goods and
Services Tax Return (GSTR-3B) and the corresponding entries in the
Table 8A of GSTR-09 for the Financial Year 2017-2018.

1.5. In addition to the foregoing, they have raised a specific inquiry

concerning the Input Tax Credit (ITC) claimed from the Cancelled
Dealers, Return defaulters & tax non payers.

1.6. Further an Order dated 27-12-2023 under section 73 was issued adding
the Penalty of amount Rs.5,00,00,/- to the tax dues which makes the
Total Liability of Rs.25,00,000.00/-

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 Annexure B: Grounds of Appeal

2. GROUNDS OF APPEAL

2.1. We M/S Raja Ram & Associates, a registered person (herein after
referred as RP) having registered address at Plot No. 1/1, Shakarpur , Laxmi
Nagar, East Delhi, Delhi-110092, with GSTIN: 07A…..1ZW. We have a

GST Registration w.e.f., 1st July 2017. We are engaged in the business
of supplying “Cement, Pebbles, Broken Stone, Natural Sand of all kind
and all other Building Material” with Primary HSN Code is 2517 and
6810.

2.2. We are engaged in the business of supplying “Articles of cement, of

concrete or of artificial Stone, whether or not reinforced other articles,
Pebbles gravel broken crushed stone”.

2.3. The GSTR 3B and GSTR 2A exhibit no discernible distinction;

throughout the year, we've claimed excess Input Tax Credit (ITC) but

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 failed to utilize the corresponding amount, opting to reverse the surplus
in March 2018. The disparity highlighted in the notice lacks accuracy.
Upon scrutinizing the ITC records in GSTR 2A and GSTR 3B, it
becomes apparent that while GSTR 2A indicates an ITC of Rs.
22,25,977.77 we only claimed Rs. 22,03,581.93 in GSTR 3B.
Therefore, the allegation of an excessive claim appears unfounded.

2.4. That transactional data was duly reflected in the Goods and Services
Tax Return (GSTR) 2A during the relevant months. However, it has
come to light that the registration of Shree Hanuman Balaji Co. was
subsequently cancelled suo-motu, retrospectively effective from the 1st
July 2017. This retrospective cancellation raises considerations
regarding the eligibility and appropriateness of the initially claimed ITC
in accordance with the revised status of the supplier.

2.5. Consequently, the retroactive cancellation of registration after the

supply occurred is deemed inappropriate for maintaining the eligibility
of the initially claimed ITC, aligning with the revised status of the
supplier. For that the Assistant Commissioner, Delhi Charge sent an
email which does not belong to the appellant and thus, there is gross
violation of the principles of natural justice.

2.6. For that the appellant’s claim of ITC in the GSTR-3B is correct, proper
and genuine and the appellant has all documents in support of the claim
and thus, disallowance of ITC is not sustainable in the eyes of law.

2.7. For that the demand is bad, illegal and disputed and thus, the recovery
proceeding is also liable to set aside.

2.8. For that the Ld. Adjudicating Authority failed to follow guideline
provided by the Hon’ble High Courts and Supreme Courts through

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 several verdicts in this regard. The appellant relied upon those and
craves leave to produce at the time of hearing.

PROVISION RELATED TO THE OUR CASE

AS PER SECTION 16: ELIGIBILITY AND CONDITIONS FOR

TAKING INPUT TAX CREDIT.-

1. Every registered person shall, subject to such conditions and

restrictions as may be prescribed and in the manner specified in
section 49, be entitled to take credit of input tax charged on any
supply of goods or services or both to him which are used or
intended to be used in the course or furtherance of his business and
the said amount shall be credited to the electronic credit ledger of
such person.
2. Notwithstanding anything contained in this section, no registered
person shall be entitled to the credit of any input tax in respect of
any supply of goods or services or both to him unless,-
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 a) he is in possession of a tax invoice or debit note issued by a
supplier registered under this Act, or such other tax paying
documents as may be prescribed;
aa) the details of the invoice or debit note referred to in clause
(a) has been furnished by the supplier in the statement of
outward supplies and such details have been communicated to
the recipient of such invoice or debit note in the manner
specified under section 37;
b) he has received the goods or services or both.
Explanation.- For the purposes of this clause, it shall be
deemed that the registered person has received the goods or,
as the case may be, services
i. where the goods are delivered by the supplier to a recipient
or any other person on the direction of such registered
person, whether acting as an agent or otherwise, before or
during movement of goods, either by way of transfer of
documents of title to goods or otherwise;
ii. where the services are provided by the supplier to any person
on the direction of and on account of such registered person;
ba) the details of input tax credit in respect of the said supply
communicated to such registered person under section 38 has
not been restricted;
1) subject to the provisions of 4[section 41, the tax charged in respect
of such supply has been actually paid to the Government, either in
cash or through utilization of input tax credit admissible in respect
of the said supply; and
2) he has furnished the return under section 39:

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 Provided that where the goods against an invoice are received in
lots or instalments, the registered person shall be entitled to take
credit upon receipt of the last lot or instalment:
Provided further that where a recipient fails to pay to the supplier
of goods or services or both, other than the supplies on which tax is
payable on reverse charge basis, the amount towards the value of
supply along with tax payable thereon within a period of one
hundred and eighty days from the date of issue of invoice by the
supplier, an amount equal to the input tax credit availed by the
recipient shall be added to his output tax liability, along with
interest thereon, in such manner as may be prescribed:
Provided also that the recipient shall be entitled to avail of the
credit of input tax on payment made by him of the amount towards
the value of supply of goods or services or both along with tax
payable thereon.
3) Where the registered person has claimed depreciation on the tax
component of the cost of capital goods and plant and machinery
under the provisions of the Income tax Act, 1961 (43 of 1961), the
input tax credit on the said tax component shall not be allowed.
4) A registered person shall not be entitled to take input tax credit in
respect of any invoice or debit note for supply of goods or services
or both after the 6[thirtieth day of November] following the end of
financial year to which such invoice or debit note pertains or
furnishing of the relevant annual return, whichever is earlier.
Provided that the registered person shall be entitled to take input
tax credit after the due date of furnishing of the return under
section 39 for the month of September, 2018 till the due date of
furnishing of the return under the said section for the month of
March, 2019 in respect of any invoice or invoice relating to such
Page 11 of 27
 debit note for supply of goods or services or both made during the
financial year 2017-18, the details of which have been uploaded by
the supplier under sub-section (1) of section 37 till the due date for
furnishing the details under sub-section (1) of said section for the
month of March, 2019.

AS PER SECTION 61: OF CGST ACT 2017 SCRUTINY OF

RETURNS

1. The proper officer may scrutinize the return and related particulars
furnished by the registered person to verify the correctness of the
return and inform him of the discrepancies noticed, if any, in such
manner as may be prescribed and seek his explanation thereto.
2. In case the explanation is found acceptable, the registered person
shall be informed accordingly, and no further action shall be taken
in this regard.
3. In case no satisfactory explanation is furnished within a period of
thirty days of being informed by the proper officer or such further
period as may be permitted by him or where the registered person,
after accepting the discrepancies, fails to take the corrective
measure in his return for the month in which the discrepancy is
accepted, the proper officer may initiate appropriate action
including those under section 65 or section 66 or section 67, or
proceed to determine the tax and other dues under section 73 or
section 74.

AS PER SECTION 73. DETERMINATION OF TAX NOT PAID

OR SHORT PAID OR ERRONEOUSLY REFUNDED OR
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INPUT TAX CREDIT WRONGLY AVAILED OR UTILISED
FOR ANY REASON OTHER THAN FRAUD OR ANY
WILLFUL-MISSTATEMENT OR SUPPRESSION OF FACTS.-

1. Where it appears to the proper officer that any tax has not been
paid or short paid or erroneously refunded, or where input tax
credit has been wrongly availed or utilised for any reason,
other than the reason of fraud or any wilful-misstatement or
suppression of facts to evade tax, he shall serve notice on the
person chargeable with tax which has not been so paid or which
has been so short paid or to whom the refund has erroneously
been made, or who has wrongly availed or utilised input tax
credit, requiring him to show cause as to why he should not pay
the amount specified in the notice along with interest payable
thereon under section 50 and a penalty leviable under the
provisions of this Act or the rules made thereunder.
2. The proper officer shall issue the notice under sub-section (1) at
least three months prior to the time limit specified in sub-section
(10) for issuance of order.
3. Where a notice has been issued for any period under sub-section
(1), the proper officer may serve a statement, containing the
details of tax not paid or short paid or erroneously refunded or
input tax credit wrongly availed or utilized for such periods other
than those covered under sub-section (1), on the person
chargeable with tax.
4. The service of such statement shall be deemed to be service of
notice on such person under sub-section (1), subject to the
condition that the grounds relied upon for such tax periods other

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 than those covered under sub-section (1) are the same as are
mentioned in the earlier notice.
5. The person chargeable with tax may, before service of notice
under sub-section (1) or, as the case may be, the statement under
sub-section (3), pay the amount of tax along with interest payable
thereon under section 50 on the basis of his own ascertainment of
such tax or the tax as ascertained by the proper officer and
inform the proper officer in writing of such payment.
6. The proper officer, on receipt of such information, shall not serve
any notice under sub-section (1) or, as the case may be, the
statement under sub-section (3), in respect of the tax so paid or
any penalty payable under the provisions of this Act or the rules
made thereunder.
7. Where the proper officer is of the opinion that the amount paid
under sub-section (5) falls short of the amount actually payable,
he shall proceed to issue the notice as provided for
8. in sub-section (1) in respect of such amount which falls short of
the amount actually payable.
9. Where any person chargeable with tax under sub-section (1) or
sub-section (3) pays the said tax along with interest payable
under section 50 within thirty days of issue of show cause notice,
no penalty shall be payable and all proceedings in respect of the
said notice shall be deemed to be concluded.
10. The proper officer shall, after considering the representation, if
any, made by person chargeable with tax, determine the amount
of tax, interest and a penalty equivalent to ten per cent. of tax or
ten thousand rupees, whichever is higher, due from such person
and issue an order.

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 11. The proper officer shall issue the order under sub-section (9)
within three years from the due date for furnishing of annual
return for the financial year to which the tax not paid or short
paid or input tax credit wrongly availed or utilised relates to or
within three years from the date of erroneous refund.
12. Notwithstanding anything contained in sub-section (6) or sub-
section (8), penalty under sub-section (9) shall be payable where
any amount of self-assessed tax or any amount collected as tax
has not been paid within a period of thirty days from the due date
of payment of such tax.

3. OUR DECLARATION AND WORKING

3.1. With respect to the first query, you have highlighted an observed
incongruity wherein a discernible variance exists disparity between the
Input Tax Credit (ITC) figures reported in the Goods and Services Tax
Return GSTR-3B and Table 8A of GSTR-09 is identified as a variance
amounting to Rs. 5,00,000 in both Central Goods and Services Tax
(CGST) and State Goods and Services Tax (SGST). Upon a meticulous
examination of the detailed GSTR 3B, it has been discerned that there
was an initial assertion of additional ITC throughout the financial year,
which was subsequently rectified through the reversal of the surplus
amount in the GSTR 3B filed for the month of March 2018. This
corrective measure was undertaken to ensure accuracy and compliance
Page 15 of 27
with the prescribed guidelines. (For your reference we have annexed
the GSTR 3B and GSTR 2A in annexure).
We would place reliance on the decision of Honorable Kerala High
Court in the case of Mina Bazar vs State Tax Officer-I [WP (C)
30670/2023, 19-Sep-2023]

Facts of the Case:

The assessment order was passed on the grounds that the assessee has
been said to have availed the input tax credit higher than the amount
reflected in GSTR-2A. Basically such reduction was based on
difference of ITC between GSTR-2A and GSTR-3B. Assessment Order
denying such credit was passed on 20-Aug-2022 and Recovery Notice
was issued on 24-Jul-2023.

Aggrieved with the Demand Order and Recovery Notice the Petitioner
approached the High Court. The Petitioner relied upon various
judgments which are as follows:
1. Diya Agencies vs The State Tax Officer (Kerala HC)
2. Suncraft Energy Pvt. Ltd. vs The Assistant Commissioner, State
Tax (Calcutta HC)
3. State of Karnataka vs Ecom Gill Coffee Trading (Supreme Court)
Kerala High Court directed the Assessing Authority to pass fresh orders
in accordance with the law. Accordingly, the petition was allowed.
Similarly, Honorable Kerala High Court in the case of Heena
Medicals vs State Tax Officer [W.P. (C) No. 30660 of 2023; 19-Sep-
2023] has held that Input Tax Credit cannot be denied merely based on
discrepancy between GSTR 2A and 3B.

Page 16 of 27
We would rely on the decision of Honorable Kerala High Court in the
case of Diya Agencies Vs State Tax Officer [WP(C) No. 29769 of 2023
dated September 12, 2023] held that, if the taxpayer is able to prove that
tax amount is paid to the seller and the Input Tax Credit claim is
bonafide so the Input Tax Credit cannot be denied merely on non-
reflection of transaction in GSTR-2A.

We would also place reliance on the decision of Hon’ble Supreme

Court in the case of State of Karnataka v. M/s. Ecom Gill Coffee
Trading Pvt. Ltd. [Civil Appeal No. 230 of 2023 dated March 13,
2023] has quashed and set aside the order passed by the Hon’ble
Karnataka High Court on the grounds that until the purchasing dealer
discharges the burden of proof under Section 70 of the Karnataka Value
Added Tax Act, 2003 (“the KVAT Act”), and proves the genuineness of
the transaction/purchase and sale by producing the relevant materials,
such as 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, such purchasing dealer shall not be entitled to Input Tax
Credit (“ITC”). Restored the order passed by the Revenue Department.
We would also place reliance on the decision of Hon’ble Supreme
Court in the case of In instant case, Assessing officer as well as first
appellate authority denied ITC under KVAT as genuineness of purchase
transaction was doubted on ground that selling dealers were either de-
registered or had filed nil returns or had denied sale - In appeal,
Tribunal allowed ITC by holding that payment of purchased goods was
made under account payee cheques against invoice and that purchasing
dealer should not suffer due to default of seller – High Court under
impugned revision order, affirmed Tribunal order - HELD : Section 70
Page 17 of 27
of KVAT clearly stipulated that burden of proof was on purchasing
assessee to establish genuineness of transaction against which ITC had
been claimed - Merely claiming to be abonafide purchaser was not
enough and sufficient to avail ITC - This burden of proof could not be
shifted on revenue by mere production of invoices or fact of having
made payments by account payee cheque to seller - Purchase transaction
was required to be proved beyond doubt by furnishing other details and
documents viz. name and address of selling dealer, details of vehicle
which had delivered goods, payment of freight charges,
acknowledgement of taking delivery of goods etc.- Aforesaid
information was required in addition to tax invoices and payment
particulars for establishing actual physical movement and receipt of
goods - Intention of legislature for establishing genuineness of
transaction, was clear in terms of section 70(2) ibid where penalty
provision has been incorporated for producing false documents - In
present case, clear evidence had been adduced by Assessing Officer that
in some of cases registration of selling dealers had been cancelled or
even sale by concerned dealers had been disputed and/or denied – In all
of these cases, purchasing dealers failed to produce supporting material
mentioned and therefore burden of proof ibid was not discharged by
them - Reversal by Tribunal of definite concurrent finding of fact
recorded by lower authorities, was not justified and so was affirmation
of Tribunal order by High Court - Reliance by assessee on KVAT
Rules,2005 was misplaced as said Rules only prescribed invoice as one
of document to avail ITC- Impugned judgments and orders passed by
High Court and Tribunal were to be set aside and quashed and orders of
Assessing Officer and first appellate authority denying ITC to
purchasing dealer was to be restored [Section 70 of Karnataka Value
Added Tax Act,2003]
Page 18 of 27
 We would also place reliance on the decision of The Kerala High
Court’s decision in the case of M/s. Henna Medicals vs. State Tax
Office, Thalassery & Ors. [WP (C) 30660 of 2023 dated September 19,
2023] sets a significant precedent by emphasizing that differences
between GSTR 2A and GSTR 3B should not be the sole basis for
denying Input Tax Credit. The court underscores the importance of
considering the totality of evidence provided by the taxpayer when
evaluating the legitimacy of an ITC claim. This ruling provides much-
needed relief for businesses facing ITC disputes based on minor
discrepancies in their GST returns. It also reinforces the principle that
evidence of a genuine ITC claim should weigh more heavily than
discrepancies between these returns.

3.2. In addressing query number 2, it is pertinent to note that the Input Tax
Credit (ITC) amounting to Rs. 2,50,000 in both Central Goods and
Services Tax (CGST) and State Goods and Services Tax (SGST) was
availed when transactions were conducted with the supplier, Shree
Balaji Co. This transactional data was duly reflected in the Goods and
Services Tax Return (GSTR) 2A during the relevant months. However,
it has come to light that the registration of Shree Balaji Trading Co. was
subsequently cancelled suo-motu, retrospectively effective from the 11th
July 2017. This retrospective cancellation raises considerations
regarding the eligibility and appropriateness of the initially claimed ITC
in accordance with the revised status of the supplier.
3.3. We intend to rely on the supporting documentation provided herewith.
Enclosed in Annexure is the detailed Tax Invoice cum Challan,
accompanied by the relevant E-way Bill details pertaining to the
specified transactions. Additionally, we have attached the Bank
Page 19 of 27
 statement reflecting the payments made to the supplier, further
substantiating the legitimacy and completeness of the financial
transactions in question. (For your reference, we have appended the
GSTR-2A corresponding to transactions with M/s Shree Balaji Co.
along with Tax invoices, E-Way Bills and Bank Transaction)

3.4. In support of our above-mentioned submission, we rely on the following

judicial pronouncements rendered by the Honorable Supreme Court and
various High Courts in GST and as well as percent’s judgment during
the Indirect Tax era which it has been categorically stated that merely
because the registration of a supplier has been canceled retrospectively,
denial of benefit of input tax credit to the recipient of the supply is not
sustainable in law:

We would place our reliance on the Decision of Honorable Calcutta

High Court in the Case of SANCHITA KUNDU VS THE ASSISTANT
COMMISSIONER OF STATE TAX, BUREAU OF
INVESTIGATION, SOUTH BENGAL [W.P.A. 7231 of 2022 With
W.P.A. 7232 of 2022, dated 05-May-2022] Petitioner challenge denial of
Input Tax Credit on the ground that the registration of the suppliers has
been cancelled with retrospective effect covering the transaction period
in question. The Petitioner was denied ITC benefit vide the impugned
order on ground that GST registration of suppliers were already
cancelled with retrospective effect covering the transaction period in
question The contention of the petitioners that the transactions in
question are genuine, valid and were made through banks. Calcutta High
Court rules that benefit of ITC cannot be denied where all the transaction
are proved to be genuine before the cancellation of registration of the

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suppliers. The Petitioner submits that the suppliers were indicated as
registered taxable person at the Government portal showing their
registrations as valid and existing at the time of transactions and
moreover, considering the limitations, petitioner did whatever was
possible in its own end to ascertain the validity of suppliers. Considering
the facts, Court propounds that without any further verification it cannot
be said that that there was any failure on the petitioner’s part in
compliance of any obligation required under the statute before entering
into the transactions and that there was no verification of the
genuineness of the suppliers. Without any further verification it cannot
be said that that there was any failure on the part of the petitioners in
compliance of any obligation required under the statute before entering
into the transactions. Therefore, setting aside the impugned order Court
directs remand of the matter to consider afresh the entitlement of
petitioner in the context of whether payments on purchase in question
along with GST were actually paid or not, whether the transactions and
purchases were made before or after the cancellation of registration of
the suppliers and whether petitioner complied with the statutory
obligation of verifying the supplier’s identity. Court directed the
respondent officer to consider afresh on the issue of their entitlement of
benefit of input tax credit in question by considering the documents
which the petitioners intend to rely in support of their claim of
genuineness of the transactions. If it is found upon verification and
considering the relevant documents that all the purchases and
transactions in question are genuine and supported by valid documents
and transactions in question were made before the cancellation of
registration of those suppliers and after taking into consideration as to
whether facts of the petitioners are similar to the judgments upon which
petitioners intend to rely and if it is found similar to the present case, in
Page 21 of 27
that event the petitioners shall be given the benefit of input tax credit in
question.

We would rely on the decision of Honorable Calcutta High Court in the

Case of LGW INDUSTRIES VS UNION OF INDIA [WPA No. 23512
of 2019, dated 13-Dec-2021]

Petitioner challenged the disallowance of input tax credit on the ground

that the purchases made by petitioners are from non-existing suppliers
and the bank accounts opened by those suppliers are on the basis of fake
documents and that the petitioners have not verified the genuineness and
identity of the suppliers before entering into transaction with those
suppliers. Further grounds of denying the input tax credit benefit to the
petitioners are that the registration of suppliers in question have been
cancelled with retrospective effect covering the transactions period in
question. Calcutta High Court remands the matter to GST Authorities to
consider afresh the case of Petitioner on issue of their entitlement of
benefit of ITC by considering the documents relied upon by Petitioner to
support their claim of genuineness of the transactions. High Court
directed the respondents to consider afresh the cases of the petitioners on
the issue of their entitlement of benefit of input tax credit by considering
the documents the petitioners want to rely in support of their claim of
genuineness of the transactions and shall also consider as to whether
payments on purchases in question along with GST were actually paid or
not to the suppliers and also as to whether the transactions and purchases
were made before or after the cancellation of registration of the suppliers
and also consider as to compliance of statutory obligation by the
petitioners in verification of identity of the suppliers. High Court
considers Petitioner’s contention that they have paid the amount of
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purchases in question as well as tax on the same not in cash and all
transactions were through banks and they are helpless if at some point of
time after transactions were over. And if the Revenue finds on enquiries
that the suppliers are fake and bogus and on this basis they cannot be
penalized unless Revenue establishes with concrete materials that
transactions in question were outcome of any collusion between
Petitioner and suppliers in question. Revenue to envisages that subject to
further verification, it cannot be said that there was any failure on part of
Petitioner in compliance of any obligation required under Statute before
entering transactions in question or for verification of genuineness of
suppliers in question. Elucidates that if on consideration of relevant
documents it is found that all purchases and transactions in question are
genuine and supported by valid documents and transactions in question
were made before cancellation of registration of those suppliers, benefit
of ITC shall be given to the Petitioner.

We would place our Reliance on the decision of Honorable Madras

High Court in the case of D.Y. BEATHEL VS THE STATE TAX
OFFICER (DATA CELL), INVESTIGATION WING [W.P.(MD)Nos.
2127, 2117 & 2121, dated 24-Feb-2021]

Petitioner challenged recovery of input tax credit for non-payment

of GST by seller. Petitioner challenged the automatic reversal of input
tax credit from the buyer on non-payment of tax by the seller.
Assessment Order was passed reversing ITC availed by the Petitioner for
non-payment of tax by the Supplier. The Petitioner was engaged in the
trading of Raw Rubber Sheets, had purchased goods from sellers and
based on the returns filed by sellers, availed ITC. However, when
Revenue discovered that sellers had not discharged their tax liability,
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Revenue passed the impugned orders, levying the entire liability on the
Petitioner, rather than confronting the sellers. Assessment Order
observes that ordinarily, the Petitioner must have received the goods and
the tax charged in respect of supply must have been actually paid to the
Govt., however, if the tax has allegedly not reached the Govt. kitty, then
the liability will have to be eventually borne by one party, either the
seller or the buyer. High Court noting that here, the Revenue does not
appear to have taken any recovery action against the seller nor has taken
a stand that the petitioner has not even received the goods and had
availed ITC on the strength of generated invoices, remarks that “when it
has come out that the seller has collected tax from the purchasing
dealers, the omission on the part of the seller to remit the tax must have
been viewed very seriously and strict action ought to have been initiated
against him.” The impugned assessment order suffers from fundamental
flaws of non-examination of seller in the enquiry and non-initiation of
recovery action against seller in the first place therefore, the impugned
assessment orders are quashed and the matters are remitted back to the
file of the respondent.

We would reliance on the Decision of Honorable Supreme Court of

India in the case of COMMISISONER OF TRADE AND TAXES
DELHI VS ARISE INDIA LIMITED [Special Leave Appeal (C) No.
36750/2017, dated 10-Jan-2018]

Delhi VAT Act Section 9(2)(g) is similar to Section 16 (2) (c) where it
was held that failure by Legislature to distinguish between bona fide and
non-bonafide purchasing dealers resulted in Section 9(2)(g) applying
equally to both the classes of purchasing dealers is hit by Article 14 of
Constitution.
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We would rely on the Decision of Honorable Madras High Court in the
case of SRI VINYAGA AGENCIES VS ASSISSTANT
COMMISSIONER [W.P. Nos. 2036 to 2038 of 2013, dated 19-Jan-
2013]

Law does not empower the tax authorities to reverse the ITC availed, on
a plea that the selling dealer has not deposited the tax. It can revoke the
input credit only if it relates to the incorrect, incomplete or improper
claim of such credit.

We would place Reliance on the Decision of Honorable Punjab and

Haryana High Court in the case of GHERU LAL BALCHAND VS
STATE OF HARYANA [Civil Writ Petition 6573 of 2007, dated 23-
Sep-2011]

The law need to distinguish between honest and dishonest dealers. Law
cannot put such onerous responsibility on the assessee otherwise, it
would be difficult to hold the law to be valid on the touchstone of
Articles 14 and 19 of the Constitution of India. In the absence of any
malafide intention, connivance or wrongful association of the assessee
with the selling dealer or any dealer earlier thereto, no liability can be
imposed on the principle of vicarious liability. Taxpayer cannot be
forced to substantiate its truthfulness by running from pillar to post to
collect the material for its authenticity.

We would rely on the decision of Honorable High court of Calcutta in

the Case of Gargo Traders Vs. Joint Commissioner, Commercial Taxes
(State Tax) & Ors. In a significant decision, the Calcutta High Court
clarified that Input Tax Credit (ITC) cannot be denied to a genuine buyer

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 when the registration of the supplier is cancelled retrospectively. The
case in point, Gargo Traders Vs. Joint Commissioner, Commercial
Taxes, underscores the rights of the registered taxable person (RTP) who
had claimed credit of input tax against supply from a supplier. The key
concern for Gargo Traders was the refusal of the respondent authorities
to grant the ITC benefit for purchases from the supplier, who was later
revealed to be fraudulent. This led to the challenging of the order and
raising the contention that the transactions ins question were legitimate,
backed by due diligence on the part of the petitioner. The court
acknowledged that at the time of the transaction, the supplier’s details
were available as valid on the government portal. A significant turning
point came with the referencing of previous judgements, particularly
from the case of M/s Law Industries Limited & Ors. which clearly
supported the petitioner’s stand. It was established that the cancellation
of the supplier’s registration with retrospective effect shouldn’t be
grounds for rejecting a genuine buyer’s refund application.

4. ACCEPTANCE AND REQUEST

4.1. In the present instance, we are hereby submitting the aforementioned

reply. As elucidated and disclosed in the preceding discussion, we assert
that we are not liable for the payment of any taxes, as we have not
engaged in any breach of the Goods and Services Tax (GST) law.
Consequently, we respectfully request that the Order issued against us
be expeditiously dropped.
4.2. It is hereby humbly submitted that in our opinion we are not liable for
the reversal of ITC based upon the above-mentioned submission and the
relevant case laws.
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4.3. As ITC is the vested right of the Registered Person, once taken as per
the applicable provisions of the Section 16 of the CGST Act, 2017. We
have followed all the conditions for claiming of the ITC and ITC cannot
be denied to bona-fide purchaser.
4.4. In view of the above submission, documentary evidences produced and
relying on the judicial pronouncements, you are requested to allow the
legitimate input tax credit claimed by the taxpayer and drop the
proceeding initiated in this regard.
4.5. We respectfully urge that the show cause notice be quashed or modified,
and additionally, we request an opportunity to present our case and be
heard before any final order is issued against us. We appreciate your
attention to this matter.

Thanks & Regards

For M/s Raja Ram & Associates

Raja Ram
(Partner)

Place: Delhi
Date: 06th Feb 2024

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