Remanding an ITC dispute involving suppliers later branded non-genuine, the Tribunal held that Section 107(11) and (12) oblige the appellate authority to decide on merits with reasons.
The Thane Bench of the GST Appellate Tribunal has set aside ex parte demands disallowing ITC of about Rs. 11.7 lakh across two years, holding that both the adjudication and first appellate stages violated the principles of natural justice [M/s Trivesh Enterprises LLP v. Joint Commissioner of State Tax, Thane/Kalyan].
The bench of Ramesh Nair, Member (Judicial) and Prallhad S. Paranjape, Member (Technical) noted that the ITC was denied because the suppliers’ registrations were later cancelled ab initio and they were classified as Non-Genuine Taxpayers. The show cause notices merely stated “AS PER ATTACHMENT” under both the facts and grounds columns, and the ex parte orders disposed of the issue in a single line.
The First Appellate Authority had rejected the appeals both on merits, for want of transport documents, and for “non-prosecution”. The Tribunal held that Section 107(11) and (12) require the appellate authority to state the points for determination, the decision and the reasons, and that dismissal for non-prosecution amounts to an abdication of statutory powers. It relied on the Patna High Court in Purushottam Stores v. State of Bihar and the Bombay High Court in CIT v. Premkumar Arjundas Luthra (HUF).
While acknowledging that the burden under Section 155 lies on the taxpayer, the Tribunal held that the department cannot rely solely on retrospective cancellation of supplier registrations without independent verification. Both matters were remanded on an open basis, with the appellant directed to produce invoices, payment proof and evidence of physical movement of goods.
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