M/S Malik Traders v/s State Of U.P. and 2 Others; Writ Tax No. – 1237 of 2021
In this recent judgment of the Allahabad High Court, the court held that that the burden of proving the genuineness of the transaction and the actual physical movement of goods lies upon the dealer claiming Input Tax Credit (ITC). Mere production of tax invoices and payment details is not sufficient to claim ITC. The dealer has to furnish additional details such as the name and address of the selling dealer, details of the vehicle that delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, and payment particulars, etc.
The Hon’ble Court referred to Section 70 of the Karnataka Value Added Tax Act, 2003, which clearly stipulates that the burden of proving that the ITC claim is correct lies upon the purchasing dealer claiming such ITC. The burden of proof that the ITC claim is correct is squarely upon the assessee who has to discharge the said burden. The burden of proof cannot get shifted on the revenue.
The court relied on the case of Commissioner Commercial Tax v/s M/s Ramway Foods Ltd., wherein it was held that the primary responsibility of claiming the benefit is upon the dealer to prove and establish the actual physical movement of goods, genuineness of transactions, etc. If the dealer fails to prove the actual physical movement of goods, the benefit cannot be granted.
Therefore, the Hon’ble Courtin this judgement stated that the burden of proving the genuineness of the transaction beyond doubt lies upon the dealer claiming ITC and mere production of tax invoices or payment by cheque is not sufficient to claim ITC, the actual physical movement of goods has to be proved.

Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate

Connect with Mr. Bhatt on Linkedin: https://www.linkedin.com/in/adit-ravishbhatt/

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