Order Date – 06 June 2023

Parties: M/s. Gargo Traders Vs The Joint Commissioner, Commercial Taxes (State Tax) & Ors.

Facts – 

• The Petitioner, M/s. Gargo Traders, claimed credit of input tax against supply made from a supplier. 
• The department rejected the claim as it found that the supplier from whom the petitioner claimed to have purchased the goods in question are all fake and non-existing and the bank accounts open by the supplier is on the basis of fake document and the claim of the petitioner of Input Tax Credit are not supported by any relevant document also the petitioner has not verified the genuineness and identity of the supplier before entering in to the transaction.

Issue – 

• Whether the officer had correctly rejected the rectification application?

Order – 

• The Single Bench of Hon’ble High Court observed that at the time of transaction, the name of the supplier as registered taxable person was already available with the Government record and the petitioner has paid the amount of purchased articles as well as tax on the same through bank and not in cash.
• It is not the case of the respondents that there is a collusion between the petitioner and supplier with regard to the transaction. Further observed that without proper verification, it cannot be said that there was any failure on the part of the petitioner in compliance of any obligation required under the statute before entering into the transactions in question.
• The respondent authorities only taking into consideration of the cancellation of registration of the supplier with retrospective effect have rejected the claim of the petitioner without considering the documents relied by the petitioner. The unreported judgment passed in the case of M/s Law Industries Limited & Ors. is squarely applicable in the present case.
• In view of the above, the impugned orders are set aside. The respondent no. 1 is directed to consider the grievance of the petitioner afresh by taking into consideration of the documents which the petitioner intends to rely in support of his claim.