Safecon Lifescience Private Limited Vs Additional Commissioner Grade 2 And Another (Allahabad High Court)

Allahabad High Court held that initiation of proceedings under section 74 of the Central Goods and Services Tax Act [CGST Act] is not tenable in law since no findings is recorded which shows that there is fraud or willful mis-statement or suppression of fact to evade payment of tax.Facts- The petitioner is engaged in trading and manufacturing business, mainly of all kinds of medicines/ pharma products on wholesale basis. They purchased medicines/ pharma products from M/s Unimax Pharma Chem, Purana Taluka Bhiwandi, Thane and at the time of supply it was in existence and duly registered with the GST department as well as Drug License Holder. The transaction of purchases made by the petitioner from the Maharashtra Party for the tax period April, 2021 which was against the Tax Invoice dated 30.4.2021 and E-way bill and transport bill of M/s Vinay Road Lines Pvt. Ltd. The whole payments of purchases were made through banking channel and the supplier also submitted his GSTR-1 and GSTR-3B within the time on GST Portal after making due tax on the turnover made by the supplier.The respondent no.2 issued show cause notice u/s. 74 of the UPGST Act on the ground that the petitioner has claimed ITC through GSTR-3B for the tax period April, 2021 on the purchase made from M/s Unimax Pharma Chem which has itself got its registration cancelled as such the petitioner has incorrectly claim ITC. Being aggrieved, the petitioner preferred an appeal which has also been dismissed on 20.11.2022 by the respondent no.2.Conclusion- Record shows that neither any finding with regard to fraud has been noticed nor mis-statement nor suppression of fact has been recorded at any stage.Held that in the case in hand the authorities have neither recorded any findings of fraud nor wilful misstatement nor suppression of fact to evade payment of tax, therefore, the proceedings under section 74 of the Act out not to have been initiated against the petitioner. Thus, the impugned order dated 20.12.2022 passed by the Additional Commissioner, Grade-2 (Appeal)- II State Tax, Agra, respondent no.1 as well as the order dated 12.1.2022 passed by the Deputy Commissioner, Commercial Tax, Agra, respondent no.2 cannot be sustained and are hereby quashed. The writ petition succeeds and is allowed.