Mere Absence Of Activity At Principal Place Of Business Doesn't Mean Invoices Issued To Assessee Are Fake: Allahabad High Court
The Allahabad High Court has held that merely because there was no activity at the principal place of business of the assessee, it cannot be presumed that the invoices issued in favour of such assessee are fake. Petitioner approached the High Court seeking quashing of the penalty order under Section 129(3) of the CGST Act and seeking release of the goods confiscated under...
The Allahabad High Court has held that merely because there was no activity at the principal place of business of the assessee, it cannot be presumed that the invoices issued in favour of such assessee are fake.
Petitioner approached the High Court seeking quashing of the penalty order under Section 129(3) of the CGST Act and seeking release of the goods confiscated under Section 129(1)(a) by the Assistant Commissioner Commercial Tax Mobile Unit Khataul, Muzaffarnagar.
Petitioner argued that the authority had imposed a penalty under Section 129(1)(b) by assuming that the petitioner was not the owner of the goods. This presumption was based on two premises: one, the petitioner only replied through the registered email, and second, upon inspection, there was no activity found in the petitioner's principal place of business.
The Court held that, only because he did not appear personally despite a summons having been issued, the petitioner cannot be held accountable despite having replied through registered email.
Regarding the second issue, the bench of Justice Shekhar B. Saraf and Justice Praveen Kumar Giri held that
“Absence of any activity at the principal place of business of the petitioner by itself cannot result in a presumption that the invoice that was issued to the petitioner was fake and that the petitioner is not the owner of the goods.”
Clause No.6 in Circular No.76/50/2018-GST dated December 31, 2018, describes the owner of the goods as “It is clarified that if the invoice or any other specified document is accompanying the consignment of goods, then either the consignor or the consignee should be deemed to be the owner. If the invoice or any other specified document is not accompanying the consignment of goods, then in such cases, the proper officer should determine who should be declared as the owner of the goods.”
In M/s Halder Enterprises v. State of U.P. and others, the Allahabad High Court had, relying on the circular, held that any person who comes forward with the tax invoices, e-way bills and other relevant documents shall be treated as the owner of the goods.
Relying on Clause No.6 in Circular No.76/50/2018-GST dated December 31, 2018 relating to release of goods to the owner and the aforesaid judgment, the Court held petitioner is the deemed owner of the goods.
Case Title: S.S. Enterprises v. State of U.P. and Another [WRIT TAX No. - 3026 of 2025]