Facts of the Case:

M/s Agarwala’s Bitumex Pvt. Ltd., engaged in the supply and export of bitumen and iron/non-alloy steel products, claimed refund of accumulated ITC under Section 54(3) of the CGST Act amounting to ₹11,41,828/- for January 2025 and ₹27,65,697/- for February 2025. The adjudicating authority rejected the claims, primarily alleging that the goods purchased from M/s KS Metals Pvt. Ltd. were not dispatched from West Bengal, as toll plaza data showed movement only through Bihar and Uttar Pradesh. It was also alleged that KS Metals had procured goods from suppliers whose GST registrations had been cancelled ab initio.

The first Appellate Authority allowed the refund claims. The Revenue challenged the said orders before the GSTAT, additionally raising allegations relating to Customs communications, licensing requirements for bitumen and alleged investigations by DGGI.

Issue:

Whether refund of accumulated ITC could be denied merely because:

• toll plaza data did not establish movement from the supplier’s registered State;
• upstream suppliers of the direct supplier had cancelled GST registrations; and
• the Revenue sought to introduce new allegations/evidence before the GSTAT which were not part of the SCN or original adjudication.

Held That:

The GSTAT, Kolkata Bench dismissed the Revenue’s appeals and upheld the grant of refund. The Tribunal held that the respondent had produced tax invoices, e-way bills, bilty, transporter certificate, bank records, shipping bills and EGM, establishing receipt and subsequent export of the goods. The Revenue had not disputed the actual export.

The Tribunal accepted the Bill-To–Ship-To model, observing that GST law does not require goods to necessarily commence movement from the supplier’s registered premises. Toll plaza receipts are not a statutory requirement under Section 16(2) for establishing movement of goods, particularly when other substantive documents support the transaction.

The Tribunal also held that the respondent’s direct supplier, KS Metals, was a registered and active supplier. The respondent could not be denied ITC merely because KS Metals had allegedly procured goods from suppliers whose registrations were cancelled. The respondent was not required to investigate the entire upstream supply chain in the absence of evidence establishing that its own purchases were fictitious.

Further, the Tribunal refused to consider the Revenue’s new allegations regarding Customs communications, licensing requirements and alleged investigations, as these were not part of the SCNs or original proceedings and no supporting evidence was properly produced before the Tribunal. Reliance was placed on Rule 45(1) of the GSTAT (Procedure) Rules, 2025 and Rule 112(1) of the CGST Rules, 2017.

ITC/refund cannot be denied merely on the basis of toll plaza discrepancies or alleged defaults of upstream suppliers when the taxpayer’s direct purchases, receipt of goods and subsequent exports are supported by substantive documentary evidence. Revenue cannot introduce a fresh case before the Tribunal beyond the scope of the original SCN and adjudication.

Case Name: THE PR. COMMISSIONER CGST & CX. v. M/s AGARWALA’S BITUMEX PRIVATE LIMITED dated 20.08.206

Citation No. 2026 Taxo.online 2495