Burden of Proof to claim ITC is on taxpayer: Supreme Court

Landmark SC Judgement on Input Credit



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.

Hon'ble Supreme Court 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."

Even the said judgement pertains to VAT regime, but it seems that principle for establishing the genuineness of the transactions has been settled vide this judgment. If the above-mentioned supreme Court order is applicable to GST also, then as per the observation of Hon'ble SC, the dealer claiming ITC has to prove beyond the doubt, the genuineness of the transaction and actual physical movement of goods.

As pe the said judgment, 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. 

To claim 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. 

Henceforth, basis of Hon'ble supreme court observations in this case it can be concluded that if the purchasing dealer has to prove the genuineness of the transaction and actual physical movement of goods by furnishing the said documents to claim the Input Tax Credit.







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