What does this Section say?

Section 155 lays down an important legal principle regarding the burden of proof under GST. It states that whenever a person claims eligibility for Input Tax Credit (ITC), the responsibility of proving such entitlement lies entirely with that person.

Input Tax Credit is a valuable benefit available under GST. Since the taxpayer claims the credit, the law requires them to establish that all legal conditions have been fulfilled. This means maintaining proper tax invoices, ensuring receipt of goods or services, verifying that the supplier has complied with applicable requirements wherever required by law, and preserving all supporting documents.

During scrutiny, audit, investigation, or assessment, GST officers may ask for documentary evidence supporting the ITC claim. If the taxpayer cannot produce satisfactory evidence, the department may deny the credit and recover the amount along with applicable interest and penalties wherever legally applicable.

The burden of proof does not rest on the department to prove that the taxpayer is entitled to ITC. Instead, it is the taxpayer's responsibility to demonstrate compliance with all statutory requirements.

Therefore, businesses should maintain proper books of account, purchase records, invoices, e-way bills where applicable, payment records, and reconciliations to defend their ITC claims during departmental verification.

Example

A trader claims ₹10 lakh of ITC but cannot produce valid tax invoices. The department may reject the credit because the taxpayer failed to prove eligibility.

Key Points

• Burden of proving ITC eligibility lies on the taxpayer.
• Proper documentation is essential.
• Applicable during audits and assessments.
• Missing evidence may lead to denial of ITC.
• Good record-keeping is crucial.

One-Line Summary

Section 155 makes the taxpayer responsible for proving eligibility for Input Tax Credit.