Allahabad HC Cancels Petition Challenging GST ITC Reversal on Fake Supplies

The Allahabad High Court dismissed a petition filed by a firm challenging penalties, interest, and the reversal of Input Tax Credit (ITC) on inward supplies from non-existent firms. Upholding the order of the additional commissioner, the court emphasized that the presence of bogus entities undermines legal proceedings. \r

It clarified that previous enrollment of firms should not estop the council from rectifying incorrectly claimed benefits. The firm, engaged in manufacturing and sales, claimed ITC on supplies purportedly received from three non-existent firms. An inquiry by the Special Investigation Branch revealed the firms' non-existence. \r

Despite the firm's assertion of actual supplies and valid GSTIN registration of the suppliers, the court ruled against penalizing the firm. This decision underscores the necessity for businesses to ensure genuine transactions when claiming ITC and sends a stern warning against fraudulent practices, reinforcing compliance with GST statutes.