Pooja Enterprises v. Government of India (GST)

Pooja Enterprises, a GST-registered taxpayer, challenged a demand order that rejected its input tax credit claim due to mismatched supplier invoices and alleged breach of Rule 36(4) of the CGST Rules. The enterprise contended the denial was arbitrary, violated natural justice, and that the revenue department failed to provide adequate hearing. The Union of India defended the action as essential to prevent fake invoicing and protect revenue. The dispute centered on the procedural rigidity of the GST portal and the extent of the tax authorities' power to automatically deny credit without detailed verification. The case highlighted the tension between ease of doing business and enforcement of digital tax compliance in the evolving GST framework.

The Supreme Court dismissed the petition, holding that the taxpayer failed to reconcile the discrepancies within the statutory timelines, and that the system-generated notice and online hearing opportunity satisfied the minimal procedural requirement under the CGST Act. The court emphasized that input tax credit is a concession, not an absolute right, and strict compliance is mandatory to check tax evasion.

Whether automatic denial of input tax credit under Rule 36(4) without granting a proper opportunity to rectify mismatches violates principles of natural justice and the constitutional right to trade; and whether the GST portal’s technical limitations can shift the entire burden onto the taxpayer.

The ruling sent a strong signal to businesses about the non-negotiable nature of real-time invoice matching and digital compliance. Industry bodies urged the GST Council to simplify reconciliation mechanisms, while tax practitioners reported increased demand for automated compliance software. The decision also sparked debates on whether the GST administration’s efficiency gains outweigh individual taxpayer hardships.