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How to Prove Genuineness of Transactions to Avail GST ITC

Recently, the Hon’ble Supreme Court delivered a judgment in State of Karnataka vs. Ecom Gill Coffee Trading Pvt. Ltd. (Civil Appeal No. 230 of 2023 dated 13.03.2023), holding that the burden of proving the genuineness of transactions to avail input tax credit lies upon the purchasing dealer (buyer).

The Court observed that merely claiming to be a bona fide purchaser is not sufficient to discharge this burden. The buyer must produce additional evidence to demonstrate actual receipt and movement of goods. If a buyer furnishes false or fabricated documents, penalties may apply. The Court further noted that in the absence of any credible evidence—such as proof of delivery of goods, invoices, or payment details—the Revenue Department is justified in denying ITC.

Although the judgment relates to the VAT regime, the same principle applies under GST as well. Section 155 of the CGST Act clearly provides that when a person claims eligibility for input tax credit, the burden of proof lies on such buyer.

Accordingly, to establish the genuineness of purchase transactions under GST, it is advisable that the purchasing dealer maintains the following documentary evidence:
• Copy of the original tax invoice received from the vendor
• Copy of the E-way bill
• Copy of toll tax receipts
• Photographs of the truck/vehicle used for transporting goods
• Measurement slip or weighment details
• Proof regarding payment made to the Goods Transport Agency (GTA)
• Stock receipt note
• Stock Register maintained by the dealer
• Stock Audit Report, if available
• Payment slip, bank statements or other evidence showing payment made for such purchases to the vendor
• Details of GSTR-2A/2B, showing that the relevant purchases are reflecting in the GST system