GSTAT Lucknow upheld denial of ₹7.69 lakh credit where vehicles in the e-way bills were untraceable or unfit, but set aside penalties under Section 122 and remanded them under Section 75(13).
GSTAT Lucknow has held that invoices, e-way bills, bilty, weighment slips and bank payments do not establish entitlement to ITC where verified transport records show the goods could not have moved and the suppliers were found bogus. [New Star Trading Company v. Shri HC Verma, Addl. Comm. Appeals CGST & CX Appeal Allahabad & Ors., 2026-juristway.com-3159-GSTAT(Lucknow)-GST]
The Bench of Narendra Kumar, Member (Judicial), and Alok Chopra, Member (Technical), rejected the appeal on the credit but set aside the penalties and remanded them.
The appellant availed ITC of ₹7,69,456 on purchases from M/s Diamond Enterprises, Bhopal, and M/s Raj Trade Link Corporation, Ghaziabad, both later held non-existent in separate orders. At the Bench’s direction, the Department obtained RTO reports on the nine vehicles. Two were untraceable, one with a capacity of 1,690 kg was shown carrying 19,215 kg, one lacked a national permit, and one had been sold in 2012. The proprietor had also stated that purchases were arranged through unidentified brokers.
The appellant argued that ITC cannot be denied for a supplier’s default without proof of collusion, citing about 40 cases. The Bench found that the RTO reports were never countered and that the cited cases did not help where the transactions themselves were fake.
Relying on Malik Traders vs State of UP, State of Karnataka v. M/s Ecom Gill Coffee Trading Private Limited and Section 155, the Bench held that actual receipt under Section 16(2)(b) is distinct from payment of tax under Section 16(2)(c), and that the recipient must prove physical movement of the goods.
On penalty, neither authority explained why Section 122 was invoked alongside Section 74, and the first appellate authority had raised the penalty from ₹76,946 to ₹7,69,456 without a hearing. Citing Section 75(13), which bars a further penalty for the same act once one is imposed under Section 74, and Circular No. 171/03/2022-GST, the Bench remanded the penalty for redetermination. No costs were awarded.
2026-juristway.com-3159-GSTAT(Lucknow)-GST
