Kerala High Court dismisses writ petition on blocking input tax credit

Case Name:

Shine Abraham v. State Tax Officer and Commissioner of State Goods & Services Tax Department

Key Takeaways:

1. The petitioner had claimed input tax credit based on supplies received from a supplier who used fake invoices and a fake address.
2. The Enforcement Department conducted an enquiry and found that the address mentioned in the invoices was closed for a long period, and attempts to locate the owner were unsuccessful.
3. The firm involved in the transactions had engaged in fictitious transactions and settled their tax liabilities using input tax credit.
4. The court considered the blocking of input tax credit as an administrative decision and dismissed the writ petition.
5. The petitioner was advised to explore other available remedies under the law.

Case Synopsis:

The judgment was delivered by the Honorable Mr. Justice Dinesh Kumar Singh on November 21, 2023.

The petitioner in this case is Shine Abraham, the proprietor of M/S. Evershine Agro Spices, located at T.B. Junction, Golden Plaza, Angamally, Ernakulam, Kerala. The respondents are the State Tax Officer of the State Goods & Services Tax Department and the Commissioner of State Goods & Services Tax Department.

The petitioner filed the writ petition seeking the quashing of the communication in Exhibit P-3, which informed the petitioner about the blocking of input tax credit amounting to Rs.16,00,000/-. The petitioner claimed that they had received supplies from Mr. Shine Abraham of M/S. Evershine Agro Spices, but it was later discovered that the GSTIN registration used for the invoices was fake.

After conducting an enquiry, the Enforcement Department found that the address mentioned in the invoices was closed for a long period, and attempts to find the owner of the shop had failed. It was also discovered that the firm had engaged in fictitious transactions and settled their tax liabilities using input tax credit.

Based on these findings, the communication in Exhibit P-3 was issued to block the input tax credit. The court found no substance in the writ petition and dismissed it, stating that the blocking of input tax credit was an administrative decision. The petitioner was advised to seek any other available remedy under the law.

FAQ:

Q1: What was the petitioner seeking in the writ petition?

A1: The petitioner sought the quashing of a communication that informed them about the blocking of input tax credit.

Q2: What were the reasons for blocking the input tax credit?

A2: The input tax credit was blocked due to the use of fake invoices and a fake address by the supplier.

Q3: What was the outcome of the writ petition?

A3: The Kerala High Court dismissed the writ petition, upholding the decision to block the input tax credit.

1. The present writ petition has been filed seeking quashing of the communication in Exhibit P-3 whereby the decision for blocking the input tax credit of the petitioner for an amount of Rs. 16,00,000/- has been communicated to the petitioner.

2. According to the petitioner, the petitioner had received supplys from Mr. Shine Abraham, M/s. Evershine Agro Spices, First Floor, Golden Plaza, 7/415-K8, Angamaly – 683 572 with GSTIN 32AZJPA1985A1ZW. The invoice number of fake GSTIN registration have been taken by people for considering the input tax credit through fake invoices.

3. From the enquiry conducted by the Enforcement Department, it was found that the said address had shutter room and the same was closed for a long period. Attempts to find out the owner of the shop had failed. After finding that the shop is closed for a long period on the basis of the proofs collected and in the presence of two undersigned independent witnesses, Scene Mahazar was prepared in respect of the shop on 08.06.2023.

4. It was also noticed that the said firm was making fictitious transactions by way of generating e-way bills. The firm mentioned above has settled their tax liabilities ITC utilisation.

5. Considering these facts that on the basis of fake invoices the petitioner had raised the claim for input tax credit on the supplies allegedly received on the basis of the fake invoices, the communication in Exhibit P-3 has been issued. Decision to block input tax credit is an administrative decision. I do not find any substance in this writ petition. The reason for blocking the input tax credit is the fake invoice and fake address of the firm from whom the petitioner had allegedly received the supply. Thus this writ petition is dismissed. The petitioner may avail to any other remedy as may be available to him under the law.

Sd/-

DINESH KUMAR SINGH

JUDGE