Important Judgment

Important Judgment

Purchasing Dealer cannot be denied ITC benefit for non-payment of Tax by the Supplier. Proceedings under section 74 cannot be initiated against the purchaser for availing the benefit of ITC in a fraudulent manner as the Fraud is committed by the Seller not the Purchaser.

Summary of the case:

?? Important Update from Uttarakhand High Court

In a recent judgment, the court has made a significant decision regarding the Goods and Services Tax (GST) and its implications on businesses.

The appellant, a retail and wholesale business dealing in iron scrap and waste, had purchased goods with proper invoices and made payments through banking channels along with applicable GST. Despite the suppliers failing to file their returns, the court held that proceedings under section 74 of the Goods and Service Tax, 2017, cannot be initiated against the appellant for availing the benefit of ITC in a fraudulent manner.

The court further noted that if the suppliers have committed a default, the purchasing dealer should not bear the consequences of denying the ITC.

In light of these considerations, the court modified the order dated 07.03.2024, stating that since the appellant has produced all the invoices from the suppliers, the appellant will deposit only 10% of the amount being demanded by the respondents.

This judgment serves as a reminder of the importance of proper invoicing and GST compliance in business transactions. It also highlights the need for suppliers to fulfill their obligations, such as filing returns, to prevent undue burden on the purchasing dealer.

Title: Subhash Singh vs Deputy Commissioner, State GST

Court: Uttarakhand High Court

Citation: SPECIAL APPEAL NO.100 OF 2024

Dated: 03-May-2024