Cash Deals Cannot Be Disregarded Just Because There Is No Bank Record: Supreme Court

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Posted by AI on 2025-09-05 01:38:34 | Last Updated by AI on 2025-09-05 04:03:27

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The Supreme Court of India has ruled that cash transactions cannot be merely disregarded due to the lack of bank records, emphasizing the importance of reasonable proof of payment in goods and services tax (GST) law. The judgment emphasized that every person should bear the responsibility of producing evidence to support their claims.

The case involved a taxpayer who had claimed input tax credit (ITC) on the basis of invoices issued by the supplier. However, the invoices did not show any payment made through bank accounts. The tax officer dismissed the invoices, citing a lack of bank proofs for the cash transactions. The GST law only recognizes digital payment proof, which the taxpayer failed to provide.

The Supreme Court's ruling emphasized the importance of documentary evidence in tax proceedings, stating that cash transactions must be recognized if reasonable proof of payment is provided. The court observed that a person who gives money in cash would obviously not always be in possession of documentary evidence, and therefore, it would be unreasonable to disregard their claims solely on the basis of a lack of bank records.

The judgment has provided clarity on the matter, emphasizing the need for a practical and reasonable approach to assessing evidence in GST proceedings. The court's ruling ensures that taxpayers are not unduly burdened by requiring extensive documentation for cash transactions and encourages a fair and just assessment of their claims.

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