Order Passed on Ground That Suppliers of Petitioner Had Issued Fake Invoices Without Any Inquiry to Be Stayed | HC

Case Details: Bhavani Metals v. Union of India - [2024] 165 taxmann.com 444 (Gujarat)

Judiciary and Counsel Details

• Bhargav D. Karia & Niral R. Mehta, JJ.
• Abhay Desai & D.K. Trivedi for the Petitioner. 
• Siddharth H. Dave & Chintan Dave, AGP for the Respondent.

Facts of the Case

The petitioner was engaged in the business of trading of scrap. The department passed an order under Section 74 on the ground that suppliers of petitioner had issued fake invoices. The petitioner filed writ petition and submitted that the authority had not taken into consideration the detailed reply filed by petitioner and no reason was assigned as to why reply was not acceptable to authority for invoking provision of Section 16(2)(c).

High Court Held

The Honorable High Court noted that the petitioner had purchased goods from suppliers whose registrations had been cancelled subsequently and therefore, petitioner would not be liable to pay GST which was included in invoices and payment was made through banking channel.

The Court further noted that the authority could not have invoked provision of Section 16(2)(c) on ground that suppliers had issued fake invoices without any inquiry or investigation. Therefore, it was held that the impugned order was to be stayed during pendency of petition on the condition of depositing Rs. 20 Lakh by the petitioner with the GST authority within a period of two weeks.