1

Ofice of the Commissioner of CentralGoods &Services Tax, Audit Commissionerate

8 Floor, GNFC Tower, Pakwan Char Rasta,SG Highway,Ahmedabad
[Link]/CnG/ADT/GST/3552/2023-GR 60-CGST-ADT CIR-9- ADT Date:07.07.2023
SCN No:185/2023-24
DIN: 20230764WYO00000FE86

Show Cause Notice No. 185/2023-24

(Issued under Section 74 of the CGST Act, 2017 read with Section 74 of the
Gujarat GST Act, 2017)

1. M/s. Prakash Farshuram Thakkar,(Trade Name: M/s. Umesh Enterprise) Dukaan Number
52, Market Yard, City Survey Number 2116, Harij, Patan, Gujarat, 384240, (herein after referred to
as 'said taxpayer') is engaged in Business of Trading of cotton and oil seeds and oleaginous fruits
oil cake and other solid residues (HSN 1207, 2306) and is holding GSTN No.- 24AFPPT3247L1ZV.

SCRUTINY AND ANALYSIS OF D0CUMENTS/RECORDS DURING AUDIT :

2. The audit of the financial records of the said taxpayer covering the period from July 2017 to
March 2022 was conducted under section 65 of CGST Act, 2017. Pursuant to completion of Audit,
Audit Report,
Final Audit Report No. 296/2023-24 dated 23.06.2023 was issued (RUD-01). In the said
Revenue Para remained
there were seven (07) Revenue Para generated out of which one (01)
cause notice all
unsettled which is discussed in detail in subsequent Para. In this show
have been referred
sections/provisions of CGST Act, 2017 (hereinafter referred to as "the said Act")
the Gujarat GST Act, 2017. The one (01)
as 'pari materia' to the same parallel provisions under
revenue para detected and unsettled is as follows:

DISCUSSION OF ONE UNSETTLED REVENUE PARA:

in respect of cancelled
REVENUE PARA 2: Non reversalof ITC availed and utilized
taxpayer duringF.Y. 2017-18and 2018-19:
Purchase register/GSTR 2A (RUD-02)
3 Whereas, during the course of audit, on verification of
it is observed that the taxpayer has availed and
and GSTR-3B (RUD-03)during the audit period,
on purchases made from the taxpayer M/s R.L.
utilized irregularlinadmissible Input tax credit ((TC) of
F.Y. 2017-18 and 2018-19 to the tune
Enterprise (GSTIN: 24AARFR6978D1ZN) during
respectively. This ITC appears to be
Rs.8,33,316/-(CGST+SGST) and Rs.77,986/- (CGST+SGST)
suo-motto effective
(M/s R.L. Enterprise ) stands cancelled
ineligible as the registration of the supplier the GST portal
cancellation of registration has been found from
from 01/07/2017. The fact regarding
below:
(RUD-04).The details of ITCavailed are as
 g o o

t h e

s u c
r e
h g i s

w h e r e

ood
esi,
t
D o

Remarks
TABLE-A and|
availed
ITC
utilised in GSTR
available in
()
invoicesITC
No. of purchase 3B
Year M/s R.L. register/GSTR2A
issuedby Registration of the
Enterprises to the (M/s R.L.
833316 supplier
taxpayer stands
833316 77986 Enterprise
2017-18 35 suo-motto
77986 cancelled
2018-19 4 effectivefrom 01/07/2017

of the
under section 16(2)a) them
disallowed recovered from
reguired to be and
that the said ITC is to be
demanded
penalty. Ihe
Theretore, it appears the same appears
with interest and
taxpayer and 2017 along
CGST Act 2017 to the 2017/Guiarat GST Act summarised as below:
CGST Act is
under Section 74(1)of interest and penalty
applicable
liabilityalong with
calculation of tax
TABLE-B
(Amount in Rs.)
Total
Interest | Penalty
F.Y. GST (CGST+SGST) TBA
833316+ TBA
833316 TBA 77986+ TBA
2017-18 TBA
77986 TBA 911302+ TBA
2018-19 TBA
TBA
Total 911302 Act,
Goods and Services
16 of the Central
is provided under Section ('SGST Act')
The eligibility of ITC Services Act, 2017
4. State Goods and
Act') and Section 16 of the Gujarat
2017 ('CGST below:
reproduced
relevant text is
(collectively the Act'). The may be
subject to such conditions and restrictions as
person shall, input tax charged
"16 (1) Every registered section 49, be entitled to take credit of
specified in
prescribed and in the manner intended to be used in the
which are used or
to him
goods or services or both credited to the electronic
credit
on any supply of the said amount shall
be
cOurse or furtherance of his business and
ledger of such perSon.
be entitled to the
anything contained in this section, no registered person shall
(2) Notwithstanding both to him unless, -
input tax in respect of any supply of goods or services or
credit of any
registered under
possession of a tax invoice or debit note issued by a supplier
(a) he is in
as may be prescribed;
thisAct, or such other tax paying documents
furnished by the
note referred to in clause (a) has been
1(aa) the details of the invoice or debit to the
supplies andsuch details have been communicated
supplier in the statement of outward
specified under section 37:1
recipient of such invoice or debit note in the manner

(b) he has received the goods or services or both.

2/Explanation.- For the purposes of this clause, it shall be deemed that the registered person has
received the goods o, as the case may be, services
 3
) where the goods are delivered by the supplier to a recipient or any other person on the
direction
of such registered person, whether actingas an agent or otherwise, before or during movement of
goods, either by way of transfer of documents of title to goods or otherwise;

(0) where the services are provided by the supplier to any person on the direction of and on account
of such registered person,J

3[(ba) the details of input tax credit in respect of the said supply communicated to such registered
person under section 38 has not been restricted:]

(c) subject to the provisions of 4(section 415**1, the tax charged in respect of such supply has
been actually paid to the Government, either in cash or through utilisation of input tax credit
admissible in respect of the said supply; and

(d) he has furnished the return under section 39:

5 Further, as per Section 16(2)(a) of the Act, the invoice should be issued by the
supplier registered under the ACT. Since, the GST registration of M/s R.L. Enterprise (GSTIN:
24AARFR6978D1ZN) has been cancelled suo motto by the department ab initio effective from
01.07.2017, M/s R.L Enterprise can not be said as registered supplier. Therefore, ITC of Rs.
9,11,3021- needs to be reversed by the taxpayer availed from M/s R.L. Enterprise during the year
2017-18 and 2018-19.

6. Further, it appears that the taxpayer had wrongly availed and utilised the ITC in excess
without having proper tax paying documents, as required under the provisions of Section 16(2)(a)
of the said Act. It appears that they had not reversed the inadmissible |TC irregularly availed and

utilised by them in excess during the period 2017-18 and 2018-19 within the prescribed time limit.
Therefore, it appears that there is a case of suppression of facts with an intent to wrongly availed
ITC irregularly in excess available and admissible to them. It appears that the total ineligible ITC
amounting to Rs. 9,11,302/- is to be disallowed and recovered from the supplier, under the
provisions of Sections 74(1) of the CGST Act 2017. It appears that the supplier would also be liable
to pay applicable interest on the non-reversal of ITC, under the provisions of Sections 50(3) of the
said Act. It appears that the supplier has suppressed the facts with an intent to wrongly availed
irregular ITC, as stated above. Accordingly, they also appear to be liable for penal action under the
provisions of Sections 74(1) of the CGST Act 2017.

7. The objection was communicated to the taxpayer vide letter dated

25.05.2023(RUD-05),
however, the taxpayer vide letter dated 13.06.2023 (RUD-06) has submitted the clarification which
was not tenable.

CONTRAVENTIONS

8 In light of the facts disCussed herein above in Para 3 to 7 and the material evidences
available on records, it appears that the Taxpayer have contravened the following provisions of the
CGST Act 2017:
 taXpayerh26 pplie

as the ." Ch
as
much supplierM/s
2017in the
CGSTAct. utilisedfrom
the availedand 01.07.2017:
16(2)la)of
Section irreqularlineliaibleITC cancelledfrom proper
(0) reaistrationwas their
reversedthe GST theyfailedtofile
whose
enterprises, muchas
[Link]
said
39(7)ofthe late
and
(1) interest on
Section39 prescribedtime; to pay
() pay tax in they failed
GSTR-3Band much as
as
said Act. in
50(3) of the Account;
Section Government
() deposit in
paymentoftax

2017:
CGST ACT,
Provisions under
Relevant Legal the
9. input tax credit. person shall be entitled to
for taking
Eligibility and conditions section. no
reaistered
Section 16. contained in this him unless,
anything services or both to under
supplier registered
or
"(2)
Notwithstanding
of any
supplyof goods a
respect note issued by
input tax in
credit of any tax invoice or debit prescribed;
possession ofa
(a) he is in paying documents as may be
other tax supply has been
this Act, or such of such
charged in respect in
(b) section 41, the tax credit admissible
provisions of utilisation of input tax
the through
(c) subject to Government, either in cash or
actually paid to the
supply:"
respect of the said

non-resident taxable
of returns. Distributor or a
Section 39. Furnishing an Input
Service shall,
registered person, other than or section 51 or section 52
provisions of section 10
"I(1)Every and outward
person paying tax under the electronically, of inward
person or a return,
thereof, furnish, a and such other
calendar month or part availed, tax payable, tax paid
for every or both, input
tax credit prescribed:
services
Supplies of goods or time, as may be
and manner, and within such
particulars, in such form class of
Council, notify certain
recommendations of the
Government may, on the subject to such
Provided that the every quarter or part thereof,
shall return for
furnish a
registered persons who specified therein."...
restrictions as may be
conditions and
sub-section (1), other than
to furnish a return under
person who is required (5), shall pay to the
3[(7) Every registered thereto, or sub-section (3) or sub-section
in the proviso required to
the person referred to date on which he is
per such return not later than the last
Government the tax due as
furnish such return: sub-section (1) shall
person furnishing return under the proviso to
4[Provided that every registered and withinsuch time,
as may be prescribed,
Government, in such form and manner, supplies of g0ods or
pay to the account inward and outward
the tax due taking into
(a) an amount equal to during a month; or
availed, tax payable and such other particulars
services or both, input tax credit determined in such manner and
amount referred to in clause (a), an amount
(b) in lieu of the
restrictions as may be prescribed]
subject to such conditions and to
sub-section (2) shall pay
person furnishing return under
Provided further that every registered
State or Union territory, inward
Government, the tax due taking into account turnover in the
the
 quarter, in
payable, and such other particulars during a
supplies of goods or services or both, tax
prescribed.]
such form and manner, and within such time, as may be

*Section 50. Interest on delayed payment of taX.

provisions of this Act or the rules
person who is liable to pay tax in accordance with the
(1)) Every Government within the period
the tax or any part thereof to the
made thereunder, but fails to pay unpaid, pay, on hS
the tax or any part thereof remains
prescribed, shall for the period for which notified by the Government
such rate, not exceeding eighteen per cent., as may be
OWn, interest at
on the recommendations of the
Council:
during a tax period and
payable in respect of supplies made
1[Provided that the interest on tax accordance with the
said period furnished after the due date in
declared in the return for the commencement of any
except where such return is furnished after
provisions of section 39, shall be levied on that
73 or section 74 in respect of the said period,
proceedings under section
debiting the electronic cash ledger.]
portion of the tax that is paid by be prescribed,
sub-section (1) shall be calculated, in such manner as may
(2) The interest under
day on which such tax was
due to be paid.
succeeding the
from the day utilised, the registered person
input tax credit has been wrongly availed and
2[(3) Where the such rate not
input tax credit wrongly availed and utilised, at
shall pay interest on such
the Government, on the
twenty-four per cent. as may be notified by
exceeding such manner as
interest shall be calculated, in
recommendations of the Council, and the
may be prescribed]

Section 155: Burden of proof. Act, the burden of proving

eligible for input tax credit under this
Where any person claims that he is
Such claim shall lie on such person.

OF THE CGST ACT, 2017

10. INVOCATION OF SECTION 74
Section 74 of the CGST Act, 2017 :
shortpaid or
officer that any tax has not been paid or
"74. (1)Where it appears to the proper by
has been wrongly availed or utilized
erroneously refunded or where input tax credit
he shall
or suppression of facts to evade tax,
reason of fraud, or any wilful-misstatement which has
with tax which has not been so paid or
serve notice on the person chargeable wrongly
has erroneously been made, or who has
been so short paid or to whom the refund
shouldnot pay
him to show cause as to why he
availed or utilised input taxX credit, requiring
and
with interest payable thereon under section 50
the amount specified in the notice along
the notice.
apenalty equivalent to the tax specified in
(2) to (6)....
that the amount paid under sub-section (5) falls
(7) Where the proper officer is of the opinion
proceed to issue the notice as provided for in
short of the amount actually payable, he shall
of the amount actually payable.
sub-section (1) in respect of such amount which falls short
sub-section (1) pays the said tax along with
(8) Where any person chargeable with tax under
twenty-five percent of such tax
interest payable under section 50 and a penalty equivalent to
 said
respect of the notice sha
prOceedingsin
notice, all
issue oflhe
days of made by the person
withinthirty concluded representation,if any,
deemedtobe consideringthe duefrom such person
officersheall,. after interest and penalty
proper amount oftax,
(9) The determine the
tax,
chargeable with of five
an order: sub-section (9) within a period
andissue under the tax
shall issue the order financialyear to which
officer return for the
(10)The proper ofannual or within five
due date for furnishing
availed or utilised relates to
vears from the credit wrongly
short paid or input tax
not paid or erroneous refund.
date of tax along
years from the under sub-section (9) pays the
an order issued equivalent to fifty
percent of
Where any person seved with a penalty
(11) section 50 and the
payable thereon under all proceedings in respect of
with interest communication of the order,
thirty days of
such tax within concluded."
deemed to be
said notice shall be and accordingly
placed full trust on the taxpayer
very beginning in place. All
these
Government has from the and confidence are
11. The mutual trust
self-assessments, etc., based on governing statutory
provisions create a
measures like therefore, the
honesty of taxpayer; on the
operate on the basis of breach of trust placed
is contravened or there is a
when any provision
liability on taxpayer
rendered
taxpayer.
the said taxpayer appears to have
discussed above, 2017 for failure to file
12. By their various acts 74 (1) of the CGST Act'
action under Section self
themselves liable for penal to pay tax, failure to
discharging the proper tax liability, failure
returns duly irregular/inadmissible TC and
proper statutory GST and utilization of
wrong availment rules made
assess the tax liability, CGST Act'2017 and
contravention of various provisions of the
Suppression of facts and thereby it appears penalty
evade payment of Goods and Services Tax;
there under with intent to
invoked.
CGST Act, 2017 is to be
under Section 74(1) of the
CGST Rules, 2017, DRC-01 A (RUD-07)
of Rule 142(1A)of the
13. In terms of the provisions intimating their liability under Section
74(5) of the
taxpayer on 28.06.2023
was issued to the said of DRC-01A
submissions against the above ascertainment in Part-B
CGST Act, 2017 or to file any
06.07.2023.
onor before
clarifications are already
vide letter dated 06.07.2023 stated that their
14. The said taxpayer
13.06.2023 (RUD-08).
submitted vide their letter dated
course of audit proceedings have
The submissions made by the said taxpayer during the
15. applicable interest and
paid/reversed ineligible ITC along with
been considered. They have not have any
contentions raised by them do not appear to
penalty under CGST Act, 2017. Hence, the
government
show cause notice. Therefore, to protect
merit so as to drop the proposal of issuing the
Section 74(1)of CGST Act, 2017.
revenue, the SCN is required to be issued under
Name: M/s. Umesh Enterprise)
16 Now therefore M/s. Prakash Farshuram Thakkar, (Trade
Gujarat, 384240, are
Dukaan Number 52, Market Yard, City Survey Number 2116, Harij, Patan,
Range-V, Division-Palanpur
called upon to show cause to the Superintendent of Central Tax,
CGST Gandhinagar Commissionerate, having his office at 9, Ambalal Avenue, Nr. Ajani Hospital,
Station Road, Sidhpur-384151 as to why:
 7

TIGamounting to Rs. 9,11,302/- CGST+SGST) should not be disallowed and recOvered

trom them, under Section 74(1) of the CcGST Act 2017 read with Gujarat GST Act 2017 as
discussed herein above in Para 3;
Interest amount on non-reversal of irregular/inadmissible ITC as shown here above in Para
16(i) should not be charged and recovered from them, under the provisions of Sections
50(3) of the CGST Act 2017 read with Section 50(3)of the Gujarat GST Act 2017
Penalty should not be imposed upon them, under the provisions of Sections 74(1) of the
CGST Act 2017, read with the provisions of Sections 74(1) of the CGST Act 2017 on the
proposed wrong availment and utilization of irregular ITC at 16()

Enterprise) Dukaan Number

17 M/s. Prakash Farshuram Thakkar.(Trade Name: M/s. Umesh
384240, are requested to tile
52, Market Yard, City Survey Number 2116, Harij, Patan, Gujarat,
which they intend to rely upon, to the
their written submissions and produce evidences
Division-Palanpur CGST Gandhinagar
Superintendent of Central Tax, Range-V,
Ajani Hospital, Station Road,
Commissionerate,, having his office at 9, Ambalal Avenue, Nr.
be heard in person before the
[Link] are also required to inform if they desire to
supplier against the action proposed within 30 days of
case is decided. If no cause is shown by the case is
appear in person or on virtual mode when the
the receipt of this notice or if they do not
decided on the basis of the available records.
posted for hearing, the case would be

if the tax demanded in the Show

Cause
18 The taxpayer is hereby also informed that
30 days from the date of service of this Show
Notice is paid alongwith applicable interest within
the tax demanded and proceedings in respect
Cause Notice, the amount of penalty shallbe 25% of
the
deemed to be concluded in terms of Section 74 (8) of
of such GST, interest and penalty shall be
GST Act, 2017.
CGST Act, 2017 read with Section 74(8) of the Gujarat
available
are listed below. All the documents are
19. The documents relied upon for this notice
this
by taxpayer and not relied on for the issue of
with the taxpayer. Any documents submitted
Central Tax, Audit Group 60, Circle IX, Audit
of
notice, can be collected from the Superintendent
days of the receipt of this notice.
Commissionerate, Ahmedabad at the above address, within 30

Remarks
Description of Documents
[Link].
23.06.2023 Available with the
1 FinalAudit Report No. 296/2023-24 dated
Taxpayer
2018 Available with the
2 Purchase register for the period from July-2017 to April
Taxpayer
for the Available with the
3 GSTR-3B and GSTR-2A returns filed by the supplier
Taxpayer
period from July-2017 to April -2018
of Available with the
4 Registration cancellation copy from GST portal in respect
Taxpayer
M/s [Link].
Available with the
5 Letter issued to the taxpayer dated 25.05.2023
Taxpayer
Available with the
13.06..2023
Reply Letter received from the taxpayer dated
 Taxpayer
7 DRC-01 A issued to the party dated 28.06.2023 Available with th
Taxpayer
8 Reply of DRC-01 received from the taxpayer dated Available with
the
06.07.2023 Taxpayer

20. The department reserves the right to add, amend, modify, delete any part or portion of this
notice and any such addendum, amendment, modification, deletion, if made, shall be deemed to be
part and parcel of this notice.
4(|2023

(Nirmal Kumar Jha),

Superintendent, AP-60,
Circle-IX CGST Audit,
Ahmedabad.
DIN No.: 20230764WYO00000FE86
[Link].
GADT/CnG/ADT/GST/3552/2023-GR 60-CGST-ADT CIR-9- ADT Dated : 07.07.2023

By Speed Post AD and E-mail

To,

M/s. Prakash Farshuram Thakkar, (Trade Name: M/s. Umesh Enterprise) Dukaan Number 52,
Market Yard, City Survey Number 2116, Harij, Patan, Gujarat, 384240,

Copy to:

1. The Superintendent Range-V, Division Palanpur, T FI yd tar t, CGST

Gandhinagar Commissionerate, 9, Ambalal Avenue, Nr. Ajani Hospital, Station Road,
Sidhpur-384151 along with copy of RUDs mentioned above, for adjudication purpose.
2. The Assistant Commissioner, Division Palanpur, CGST Gandhinagar Commissionerate
Sardar Patel Vyapar Sanku, Urban Bank Road, Nr. Telephone Exchange, Mal Godown,
Mehsana384 002

3. The Deputy Commissioner, Technical Section, CGST Commissionerate Ahmedabad.

4. Guard File.