E-Way Bills, Invoices And Bank Payments Alone Cannot Prove Actual Receipt Of Goods For ITC: GSTAT Agra

The Goods and Services Tax Appellate Tribunal (GSTAT), Agra, on 5 November held that producing tax invoices, e-way bills and bank payment records is not sufficient to establish the actual receipt of goods for claiming Input Tax Credit (ITC), particularly when the supplier is found to be non-existent.

A Bench of Judicial Member Ajeet Singh and Technical Member Vivek Kumar dismissed an appeal filed by Prakash Iron Foundry, holding that the burden of proving the genuineness of an ITC claim rests on the taxpayer under Section 155 of the Central Goods and Services Tax (CGST) Act. It observed:

“Thus, the submission of paper tax invoices banking payment entries, lorry receipts and location photographs does not automatically establish genuine physical receipt of goods, as paper trails can easily be created to give an impression of authenticity.”

The dispute arose after a departmental inspection found Dwarkadhish Traders, from whom Prakash Iron Foundry had claimed ITC, to be non-existent. The tax authorities consequently reversed the ITC claim and imposed penalty and interest.

Challenging the demand, Prakash Iron Foundry argued that the transactions were genuine and supported by tax invoices, e-way bills, lorry receipts, goods receipt notes, photographs and bank payment records. It also contended that the authorities had relied solely on the inspection report without independently examining the evidence.

The Tribunal rejected these arguments, observing that the documents furnished did not conclusively establish the actual supply and receipt of goods. It noted that e-way bills alone could not prove the physical movement of goods and that the photographs produced by the taxpayer did not establish when they were taken.

It held that once the department established through physical verification that the supplier was non-existent, the taxpayer was required to produce independent and verifiable evidence to establish the actual source and receipt of the goods.

Further, the Bench noted that Prakash Iron Foundry had failed to establish that the supplier had deposited the corresponding tax with the government.

Accordingly, the GSTAT dismissed the appeal and upheld the reversal of ITC along with the applicable penalty and interest.

For Appellants: CA Shashi Kumar Agrawal.

For Department: Mukesh Kumar, D.C./SR.