Registration of purchasing dealer cannot be cancelled for fraud committed by selling dealer: HC

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  • Last Updated on 24 November, 2021

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GST Registration - Revocation of cancelled registration

Case Details: Bright Star Plastic Industries v. Additional Commissioner of Sales Tax - [2021] 132 taxmann.com 146 (Orissa)

Judiciary and Counsel Details

    • Dr. S. Muralidhar, CJ. and B.P. Routray, J.
    • P.K. Harichandan, Adv. for the Petitioner. 
    • S.S. Padhy and S. Mishra, ASC for the Respondent.

Facts of the Case

The show cause notice was issued to the petitioner for cancellation of registration alleging the claim of input tax credit on fake invoices issued by non-existent supplier. It filed clarification but registration was cancelled holding that clarification submitted was not satisfactory. It filed for revocation of cancellation of registration but it was rejected. Thereafter, appeal was filed before the Appellate Authority and the same was also rejected. It filed writ petition against the same.

High Court Held

The Honorable High Court observed that the department would have to show that somehow the purchasing dealer and selling dealer acted in connivance to defraud the revenue. However, the department failed to show that the petitioner as a purchasing dealer deliberately availed of the ITC in respect of the transactions with an entity knowing that such an entity was not in existence. Thus, the department was directed to restore the petitioner’s registration by issuing appropriate orders/directions.

Case Review

List of Cases Referred to

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