Toll Plaza Receipts Not Mandatory to Prove Movement of Goods: GSTAT Kolkata Upholds ITC Refund
Taxonation.AI Team · 3 Sept 2026
The Kolkata Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) has dismissed two appeals filed by the Revenue concerning refund of accumulated Input Tax Credit (ITC) claimed by an exporter of bitumen and iron/non-alloy steel products. The Tribunal held that discrepancies in toll-plaza movement, particularly in a “Bill To–Ship To” transaction, cannot by themselves establish that goods were not physically supplied or received.
The Tribunal also rejected the Revenue’s attempt to introduce new allegations at the appellate stage, emphasizing that proceedings under the GST law must remain within the framework of the allegations contained in the Show Cause Notice (SCN).
Background of the Case
The dispute arose in two connected appeals, APL/10/KLK/2026 and APL/14/KLK/2026, filed by the Revenue before the GSTAT, Kolkata Bench. Since both appeals involved substantially similar facts and questions of law, they were heard and disposed of together through a common order.
The respondent, M/s Agarwala’s Bitumex Private Limited, is engaged in the supply of products including iron/non-alloy steel bars and rods and bitumen. It also undertakes exports and claimed refunds of accumulated ITC under Section 54 of the Central Goods and Services Tax Act, 2017.
For January and February 2025, the company claimed refunds of approximately ₹11.42 lakh and ₹27.66 lakh, respectively.
The jurisdictional adjudicating authority scrutinized the claims and issued SCNs alleging deficiencies in the underlying inward supplies. The refund claims were subsequently rejected.
However, on appeal, the Joint Commissioner (Appeals), CGST & Central Excise, Siliguri Appeal Commissionerate, allowed the refund claims and set aside the adjudication orders.
The Revenue thereafter approached the GSTAT challenging the appellate orders.
Revenue’s Principal Objections
The Revenue primarily questioned the genuineness of the inward supply chain and the eligibility of the ITC forming the basis of the refund.
One of the principal allegations concerned the movement of goods. According to the Revenue, the vehicles associated with the relevant e-way bills did not show toll-plaza crossings in West Bengal. Instead, the available toll data indicated movement through Bihar and Uttar Pradesh.
The Revenue argued that this contradicted the declared dispatch location in West Bengal and suggested that the goods had not actually moved from the stated place of dispatch.
The Department further relied upon the fact that the respondent’s direct supplier, M/s KS Metals Pvt. Ltd., had procured goods from two other suppliers whose GST registrations had allegedly been cancelled ab initio.
According to the Revenue, such circumstances cast doubt on the existence of the underlying goods and consequently on the eligibility of the ITC.
The Revenue also raised several additional allegations relating to verification by customs authorities, investigation by other tax authorities and licensing requirements applicable to bitumen.
The Respondent’s Defence
The exporter disputed the Revenue’s allegations and emphasized that its purchases were supported by a substantial body of documentary evidence.
These included:
Tax invoices;
E-way bills;
Bilty/transport documents;
Shipping bills;
Export General Manifest (EGM) details;
Transporter certificates; and
Bank statements evidencing payments.
The respondent explained that the transactions were undertaken under the “Bill To–Ship To” model.
Under this arrangement, the supplier was instructed to deliver the goods directly to the designated place of export rather than first transporting them to the supplier’s registered premises in West Bengal.
The respondent argued that GST law does not require goods in every transaction to physically originate from the registered premises of the supplier. More importantly, the goods had actually reached the ship-to location and were subsequently exported.
The respondent also contended that there was no statutory requirement for a purchaser to independently investigate every supplier in the upstream chain of transactions.
Since its direct supplier, KS Metals Pvt. Ltd., was a registered supplier and the respondent had received the goods against tax invoices and transportation documents, cancellation of the registrations of suppliers further upstream could not automatically invalidate its ITC.
Tribunal’s Findings on Toll-Plaza Data
One of the most significant aspects of the Tribunal’s decision concerned the Revenue’s reliance on toll-plaza movement.
The Tribunal noted that the Department itself did not dispute the subsequent export of the goods. The export was supported by customs documentation, and the Tribunal also noted the availability of evidence concerning realization of export proceeds.
The principal dispute was therefore reduced to the manner and route by which the goods had been transported.
The Tribunal examined the e-way bills and found that the transactions followed a Bill To–Ship To model.
It observed that there is no requirement under GST law that goods must necessarily commence their physical journey from the registered place of business of the supplier.
Where the supplier delivers goods to a ship-to location pursuant to the recipient’s instructions, the absence of toll movement from the supplier’s registered premises cannot, without more, establish that the supply was fictitious.
The Tribunal also relied upon the decision of the Allahabad High Court in Raghuvansh Agro Farms Ltd. v. State of U.P. [2025 TAXONATION 3106 (ALLAHABAD)], where the Court held, in substance, that toll-plaza receipts are not prescribed under GST law as a mandatory requirement for establishing physical movement of goods.
The GSTAT consequently held that toll-plaza receipts cannot be treated as an indispensable statutory document for establishing transportation where other substantive evidence supports the transaction.
Documentary Evidence Supported the Transaction
The Tribunal attached importance to the fact that the respondent had produced multiple documents evidencing the transaction.
The documentary trail included the e-way bills, bilty copies, shipping bills, EGM details, transporter documentation and banking records.
These documents collectively supported:
The purchase of goods;
Transportation of the goods;
Receipt of the goods at the ship-to location;
Subsequent export of the goods; and
Financial transactions through banking channels.
The Tribunal noted that these documents had not been successfully disputed by the Revenue.
Thus, an adverse conclusion could not be drawn merely because toll-plaza data did not demonstrate movement through West Bengal.
Cancellation of Upstream Suppliers’ Registrations
The second major issue concerned the cancellation of GST registrations of suppliers further upstream in the supply chain.
The Revenue argued that KS Metals Pvt. Ltd. had procured goods from two suppliers whose registrations had been cancelled ab initio. According to the Department, this indicated that the goods were not genuinely available for supply.
The Tribunal, however, distinguished between the respondent’s direct supplier and suppliers further removed in the supply chain.
The respondent had purchased goods from KS Metals Pvt. Ltd., whose registration itself was not disputed and remained valid.
The Tribunal therefore found that the respondent could not automatically be held responsible for alleged irregularities committed by suppliers with whom it had no direct transaction.
The mere fact that an upstream supplier’s registration had subsequently or retrospectively been cancelled did not, by itself, establish that the respondent had not received goods or that its own transaction was fictitious.
ITC Eligibility Cannot Be Based on Mere Suspicion
The Tribunal’s reasoning reinforces an important principle concerning ITC disputes: the Department must establish a substantive defect in the taxpayer’s own transaction rather than rely solely upon suspicion arising from transactions further upstream.
The respondent had demonstrated actual receipt and subsequent export of the goods.
The Tribunal also found that the conditions prescribed under Section 16(2) of the CGST Act had been complied with on the facts before it.
Consequently, the accumulated ITC could not be denied merely because the Department had identified irregularities concerning the upstream supply chain or because toll data did not correspond with the Department’s expected transportation route.
Revenue’s Attempt to Introduce New Grounds
Another important issue arose from the additional allegations raised by the Revenue before the Tribunal.
The Revenue referred to matters including communications from customs authorities, alleged investigations, licensing requirements relating to bitumen and concerns regarding the respondent’s ITC.
The respondent objected that these allegations had not formed part of the original SCNs or the adjudication proceedings.
The GSTAT accepted this objection.
The Tribunal observed that the original SCNs had essentially raised two issues:
The alleged absence of movement of goods from the declared dispatch location; and
The cancellation of registrations of suppliers further upstream from the respondent’s direct supplier.
The additional allegations were not part of the original SCNs.
Tribunal Dismisses Revenue’s Appeals
After examining the records, the GSTAT concluded that the respondent had produced sufficient documentary evidence supporting the inward supplies, transportation and subsequent exports.
The absence of toll-plaza movement through West Bengal was not sufficient to negate the transactions, particularly in view of the Bill To–Ship To arrangement.
Similarly, the cancellation of registrations of suppliers further upstream did not, by itself, establish that the respondent’s direct purchases were non-genuine.
The Tribunal also refused to consider new allegations that had not been part of the original SCNs and adjudication proceedings.
Accordingly, the GSTAT dismissed both Revenue appeals—APL/14/KLK/2026 and APL/10/KLK/2026—and upheld the appellate authority’s decision allowing the refund claims.
GST Case Law The Pr. Commissioner CGST & CX, Siliguri Commissionerate, Anil Kumar Singh Versus Agarwala’s Bitumex Private Limited
Citation-2026 TAXONATION 2148 (GSTAT KOLKATA)
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