9911796707
TMI Blog2023 (11) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... d 30.09.2020 respectively passed by the respondents and quash the same as being arbitrary, illegal and ultra vires the provisions of Section 50 and 74 of the CGST Act/SGST Act. 2. Since common issue is involved in both the Writ Petitions, these Writ Petitions are taken up together for final disposal. 3. The petitioners in W.P.Nos.19200 and 19205 of 2020 are the trading units engaged in buying and selling of yarn. On 27.02.2020, the officials of the State GST visited the premises of the petitioners and observed that there was no trace of any business activity. It was noticed that the petitioners effected outward and inward supply of cotton yarn from M/s.Sri Karunambikai Mills Pvt.Ltd. (SKMPL) and M/s.Arun Tex during July 2017 to March 2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vity. Later, based on the documents furnished by the petitioners, the State Tax Officer alleged that the petitioners have not produced any documentary proof for movement of goods from the place of the supplier of goods to the petitioners' premises. Therefore, a show cause notice, dated 28.05.2020 was issued to the petitioners proposing to disallow the input tax credit availed by them to the extent of Rs. 2,39,10,954/- and 1,52,02,980/- respectively and their outward liability was assessed to tax with interest and penalty. On 07.09.2020, the petitioners filed a reply to the show cause notice, stating that they were engaged in buying and selling of cotton yarn from M/s.SKMPL and M/s.Ravi Tex and sell the same to them as per the requiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence, mere absence of goods at the premises of the petitioners, it cannot be construed that there was no trace of business activity and the denial of ITC to the petitioners merely on the basis of the allegation that the petitioners have not proved the transport of goods from the suppliers place to the petitioners' place, is contrary to Section 16(2)(d) of the Act. He would further contend that in the absence of invoking provisions of Section 122 of the Act and without putting the petitioners on notice as to which of the penalty prescribed under the said section is proposed to be levied on the petitioners, imposing the penalty under Section 74 of the Act is not permissible and hence, the impugned orders are without authority of law an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not have any impact on the petitioners inasmuch disallowing the input tax credit will affect the beneficiary who availed it and in the present case, M/s.SKMPL in liquidation is the beneficiary and not the petitioners. As against the petitioners, penalty and interest were fastened based on the search conducted and the documents seized at the premises of the petitioners, where it was found that the petitioners had indulged in creation of bogus invoices and they had not at all conducted any business activities and it was concluded that the cotton yarn purchased and sold by the petitioners have not been received in the premises. It is not the case of the petitioners that no opportunity was afforded during adjudication of the proceedings and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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