ITC Reversal Valid Where Supplier Didn’t Pay Tax & Buyer Failed Proof | HC

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ITC reversal supplier tax default

Case Details: Tvl. Global Offset Printers v. Assistant Commissioner (ST)(FAC) - [2025] 175 taxmann.com 613 (Madras)

Judiciary and Counsel Details

  • C. Saravanan, J.
  • A. Satheesh Murugan for the Petitioner.
  • J.K.Jayaselan, Govt. Adv. for the Respondent.

Facts of the Case

The petitioner challenged an assessment order for the assessment year 2017-18. The primary issue raised by the petitioner was the denial ITC. The petitioner argued that the ITC was denied on the grounds that the supplier had collected tax from the petitioner but failed to remit it to the government. Consequently, the petitioner contended that no case had been made out for invoking Section 74 of the CGST/TNGST Act, which deals with the extended period of limitation in cases of fraud or suppression of facts.

The petitioner also cited a previous decision by the Madras High Court in S.S. Communications v. Deputy State Tax Officer W.P.(MD) No.22420 of 2024, dated 20-9-2024, where the court had held that invoking Section 74 was inappropriate without a finding of fraud or wilful misstatement. The petitioner claimed that no such findings were made in their case, and thus, the assessment order should be set aside.

In contrast, the revenue argued that the petition lacked merit, as the petitioner had an alternate remedy under Section 107 of the TNGST Act, which provides for an appeal. Additionally, the respondent maintained that there was no violation of natural justice that warranted the interference of the court in this case.

Upon reviewing the provisions of the CGST/TNGST Act and the facts presented, the court noted that the ITC availed by the petitioner during the disputed period (2017-18) was provisional. The court referred to the Supreme Court’s decision in State of Karnataka v. Ecom Gill Coffee Trading (P.) Ltd. [2023] 148 taxmann.com 352 (SC), which established that mere production of invoices was insufficient to prove the genuineness of the transaction.

The burden of proving the genuineness of the transaction lay with the purchasing dealer (the petitioner).

High Court Held

Therefore, the court dismissed the writ petition, finding no merit in the petitioner’s arguments. However, the court allowed the petitioner liberty to file a statutory appeal before the Appellate Authority within 30 days, subject to compliance with the statutory requirements.

List of Cases Reviewed

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied