HC ruling on ITC admissibility gives hope of protection to genuine buyers: Official

Genuine GST payers facing denial of input tax credit (ITC) due to cancellation of supplier registration for fake invoicing can see some hope in the recent Calcutta High Court ruling as it will set the ball rolling for a final decision on the matter, a senior tax official said on Wednesday.

The Calcutta High Court last month had ruled that taxpayers under Goods and Services Tax (GST) should not be denied the benefit of the input tax credit if they are able to establish the genuineness of the transaction in cases where supplier's registration has been cancelled after the transaction.

GST Council Additional Secretary CS Mohapatra said the court order may set the ball rolling for a final decision on the matter. ''If it is found upon considering the relevant documents that all the purchases and transactions in question are genuine and supported by valid documents and transactions in question were made before the cancellation of registration of those suppliers and after taking into consideration the judgments of the Supreme Court and various High Courts which have been referred in this order and in that event the petitioners shall be given the benefit of ITC in question," the court had said.

Mohapatra said, ''Kolkata HC has given an order, (and) that order gives the hope that genuine buyers will be protected…Though it is a qualified statement, it in a big way sorts out the issue in the judicial forum and after that maybe somebody, the other party, will go to the Supreme Court and ultimately there will be some solution coming''. ''The Kolkata HC (ruling) may start setting the ball rolling in terms of final decision on the matter,'' he noted.

Speaking at a PHDCCI event here, Mohapatra said the problem of fake invoices is becoming more and more acute. ''In one year, Rs 40,000 crore fake invoices in 5,700 cases. What are we doing about this? How are we controlling our brethren in improving our own credibility? You should also tell them, ... as (industry) associations that it is in nobody's interest to fake things. Why should we not uproot the problem from the beginning,'' he said.

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