Home GST ITC to be denied to Purchaser if provider fails to pay GST to Authorities even after gathering from purchaser: HC

ITC to be denied to Purchaser if provider fails to pay GST to Authorities even after gathering from purchaser: HC

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ITC to be denied to Purchaser if provider fails to pay GST to Authorities even after gathering from purchaser: HC

ITC to be denied to Purchaser if provider fails to pay GST to Authorities even after gathering from purchaser: HC

Factors to be famous:

Enter Tax Credit score (ITC) is within the nature of a profit/concession and never a Statutory Proper. [ALD. Automotive Pvt. Ltd. v. The Commercial Tax Officer & Ors. (Civil Appeal Nos. 10412-10413 of 2018)]

Authority can present restrictions at time of giving profit/ concession in type of ITC. Essentially, the situations for such availment of credit score must be scrupulously adopted failing which there might be no profit conferred on the assessee. The profit is one conferred by the statute and if the situations prescribed within the statute aren’t complied; no profit flows to the claimant. [ALD. Automotive Pvt. Ltd. v. The Commercial Tax Officer & Ors. (Civil Appeal Nos. 10412-10413 of 2018)]

Burden of Proof of ITC lies with Claimant of ITC: The seller who claims Enter Tax Credit score has to show past doubt, the precise transaction by furnishing the identify and deal with of the promoting seller, particulars of the automobile delivering the products, fee of freight costs, acknowledgment of taking supply of products, tax invoices and fee particulars and so forth. To maintain a declare of Enter Tax Credit score on purchases, the buying seller must show and set up the precise bodily motion of the products & genuineness of transactions, by furnishing the main points referred to above and mere manufacturing of tax invoices wouldn’t be adequate to say ITC. [Hon’ble Supreme Court in The State of Karnataka v. M/s Ecom Gill Coffee Trading Private Limited]

The situations for enabling ITC profit, can be found in Clauses (a) (b) and (c) of Part 16(2) that are in seriatim; the existence of a tax bill or debit observe issued by the provider, proof of receipt of products or providers or each and the tax charged in respect of such provide having been really paid to the Authorities, both in money or by means of utilization of Enter Tax Credit score admissible in respect of the stated provide.

The stated situations for availing ITC are to be glad collectively and never individually or in isolation, and these are the situations and restrictions which might regulate the availment of Enter Tax Credit score. Enter Tax Credit score by the very nomenclature contemplates a credit score being out there for the buying seller in its credit score ledger by means of fee of tax by the provider to the Authorities.

Producing invoices, account particulars and the paperwork evidencing transportation of products doesn’t absolve the assessee from the rigor supplied underneath sub-clause (c) of Part 16(2) of the BGST Act, which requires the credit score of tax, collected from the buying seller; both in money or by means of utilization of admissible Enter Tax Credit score, being out there within the context of the provider having really paid tax to the Authorities.

This in impact is a burden of proof forged on the buying seller who claims Enter Tax Credit score, which is a proper created underneath statute; sustained solely underneath the precise phrases of the statute.

The Recipient Purchaser can’t content material for double taxation because the declare of ITC is denied solely when the provider who collected tax from the purchaser fails to pay it to the Authorities.

The phrase ‘Enter Tax Credit score’ itself postulates a scenario the place the buying seller has a credit score within the ledger account maintained by it with the Authorities. The stated credit score can solely come up when the provider pays up the tax collected from the purchaser. The mere manufacturing of a tax bill, institution of the motion of products and receipt of the identical and the consideration having been paid by means of financial institution accounts wouldn’t allow the Enter Tax Credit score; until the credit score is accessible within the ledger account of the buying seller.

The vendor and purchaser have an unbiased contract with out the junction of the Authorities. The statute offers for a levy of tax on items and providers or each, provided by one to the opposite which might be collected however the seller who collects it has additionally the duty to pay it as much as the State. The statutory levy and the additional advantage of Enter Tax Credit score conferred on the buying seller relies upon not solely upon the gathering by the vendor but additionally the due fee by the vendor to the Authorities. When the provider fails to adjust to the statutory requirement, the buying seller can’t, with out credit score in his account declare Enter Tax Credit score and the treatment out there to the buying seller is just to proceed for restoration towards the vendor. Even when such restoration from the provider is effected by the buying seller; the State would be capable of recuperate the tax quantity collected and never paid to the exchequer, from the promoting seller because the rigor of the provisions for restoration on failure to pay up, after gathering tax, permits the Authorities so to do.

It’s clear that the literal nomenclature and the statutory language, mandates that there needs to be credit score out there within the credit score ledger of the purchaser to say Enter Tax and in any other case the declare could be pissed off.

For Official Judgment Obtain PDF Given Beneath:

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