Order Date: 12 May 2022

Facts-

• The Petitioner, M/s Dhara Enterprises has engaged in the business of ferrous waste and scrap.
• The Petitioner was served with a notice dated 13.03.2017 under Section 74(1) of the CGST Act. The said notice ensued in passing of an order dated 28.05.2019 by which the tax liability was imposed upon the petitioner along with penalty.
• The Respondent submitted that the Petitioner had availed the benefit of some ineligible ITC on inward supply from a Supplier M/s V.K. Enterprises, Chhatarpur who is under scanner.
• The Petitioner had submitted reply and disclosed the transaction with regard to the Supplier and along with the reply, the Petitioner had also annexed the relevant documents pertaining to transactions i.e. copy of bill, e-way bill.
• The petitioner contended that there is gross violation of the principle of natural justice, while issuing the SCN, when the authorities alleged that the Petitioner had availed some ineligible ITC, then they should have disclosed the transactions on which such benefit was availed by the Petitioner.
• The Petitioner had filed this Petition praying to quash the Impugned order.

Issue-

• Whether the Petitioner was right in availing credit when he was having the knowledge that the transactions with its supplier were under investigation?

Order-

• The Division Bench of Hon’ble High Court observed that the Petitioner did not file any reply to the notice issued under Rule 142(1) but has made an attempt to demonstrate that he sought documents from the Respondent to have some clarity on the issue, but those documents were not supplied to the Petitioner and hence for want of those documents, the Petitioner could not file reply.
• Further, the Petitioner was well aware about the transaction for which the notice was issued to it. Thus, apparently, the Petitioner has made futile attempt to lay the foundation by raising a ground that he was not informed regarding the transactions.
• The Petitioner was in the knowledge that the transactions with Supplier were under scanner.
• The appeal was dismissed and decided in favor of the Respondent.