The Allahabad High Court examined the legality of proceedings initiated under Section 74 of the UPGST Act against the petitioner for availing Input Tax Credit on purchases made from a duly registered supplier at the time of transaction.

The Court recorded that:

  • The petitioner established actual movement of goods supported by tax invoices, e-way bills, transport bilties, and purchase orders.

  • Payments were made through banking channels, and both the petitioner and supplier had filed returns, with tax payment reflected in GSTR-3B on the GST portal.

  • No material was brought on record by the authorities to rebut these facts.

Relying upon the circular dated 13.12.2023 and earlier judicial pronouncements, including M/s Khurja Scrap Trading Company v. Additional Commissioner Grade‑2 and the Supreme Court decision in Continental Foundation Joint Venture Holding v. Commissioner of Central Excise, the Court reiterated that fraud, wilful misstatement, or suppression of facts with intent to evade tax is a mandatory pre-condition for invoking Section 74.

In the absence of any such finding, the impugned assessment and appellate orders were held to be unsustainable and were quashed, allowing the writ petition in favour of the assessee.

Link to download the order
https://mytaxexpert.co.in/uploads/1766386591_SafeconLifesciencePvtLtdvsAdditionalCommissionerGrade2AllahabadHighCourt.pdf