[Opinion] Burden of Proof to claim GST ITC as per recent Supreme Court Judgment

Ashwani Kumar – [2023] 148 taxmann.com 350 (Article)

Both in pre and post GST regime, burden of proving the genuineness of Input tax credit is entrusted over the taxpayer. In all the cases, taxpayers are required to prove the genuineness of ITC claim beyond the doubts. Number of judgements has been delivered by the various courts in the past and in that series of cases an addition has been made by the Hon’ble Supreme Court of India in the case of “The State of Karnataka v. Ecom Gill Coffee Trading (P.) Ltd. [2023] 148 taxmann.com 352.

As per the said judgment, merely production of the invoices or the payment made by cheques to revenue authorities is not enough. Further production of these documents cannot be said to be discharging the burden of proof cast under the Act. The dealer claiming ITC has to prove transaction by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. The aforesaid information would be in addition to tax invoices, particulars of payment etc. In fact, if a dealer claims Input Tax Credit on purchases, such purchaser has to prove and establish the actual physical movement of goods, genuineness of transactions by furnishing the details referred above and mere production of tax invoices would not be sufficient to claim ITC. At the Para 9.1 of said judgement, Hon’ble SC observed that

“In fact, the genuineness of the transaction has to be proved as the burden to prove the genuineness of transaction would be upon the purchasing dealer. At the cost of repetition, it is observed and held that mere production of the invoices and/or payment by cheque is not sufficient and cannot be said to be proving the burden.”

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