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Part-99-One Pager Snapshot to the Latest Cases on entitlement of ITC as per the provisions of Section 16-Part-II

-Merely on the ground that in Form GSTR-2A the tax is not reflected, should not be a sufficient ground to deny the claim of ITC.

-Section 16(4) is constitutionally valid and is not violative of Articles 19(1)(g) and Article 300-A of the Constitution of India and is not inconsistent with or in derogation of any of the fundamental right guaranteed under the Constitution of India.

-Claim of Input Tax Credit raised by the petitioner cannot be sustained when the supplying/selling dealer has not paid up the amounts to the Government; despite collection of tax from the purchasing dealer.

S.No

Case Subject

Case

Held

1

Merely on the ground
that in Form GSTR-2A
the tax is not reflected,
should not be a
sufficient ground to
deny the claim of ITC.

Diya Agencies v.
State Tax Officer
[2023] 154
taxmann.com 421
(Kerala)

The Court had observed that if supplier has not remitted the amount paid by the petitioner to him, the petitioner cannot be held responsible. Whether
the petitioner has paid the tax amount and the transactions between the petitioner and seller dealer are genuine are the matter on facts and evidence.
The petitioner must discharge the burden of proof regarding the remittance of tax to the seller dealer by giving evidence as mentioned in the Judgment
of the Supreme Court in 2023 (3) TMI 533 SC (The State of Karnataka v. M/s. Ecom Gill Coffee Trading Private Limited). If on examination of the
evidence submitted by petitioner, assessing officer is satisfied that claim is bonafide and genuine, petitioner should be given input tax credit. Merely
on the ground that in Form GSTR-2A the said tax is not reflected should not be a sufficient ground to deny the assessee the claim of input tax credit

2

Section 16(4) is
constitutionally valid
and is not violative of
Articles 19(1)(g) and
Article 300-A of the
Constitution of India
and is not inconsistent
with or in derogation of
any of the fundamental
right guaranteed under
the Constitution of
India.

Gobinda
Construction v.
Union of India [2023]
154 taxmann.com
311 (Patna)

-The Court observed that ITC is not unconditional and a registered person becomes entitled to ITC only if the requisite conditions are fulfilled and
the restrictions contemplated Section 16(2) do not apply. One of the conditions to make a registered person entitled to take ITC is prescribed Section
16(4). The right of a registered person to take ITC under Section 16(1) becomes a vested right only if the conditions to take it are fulfilled, free of
restrictions prescribed under Section 16(2).
-The Court was of the view that provision under Section 16(4) is one of the conditions which make a registered person entitled to take ITC and by no
means it can be said to be violative of Article 300-A.
-It was argued that there is absence of any rationale behind fixation of a cut-off-date for filing of return. The Court did not find any merit in the
submissions so advanced, and outrightly rejected the submission.
-It was further observed that Fiscal legislation having uniform application to all registered persons and cannot be said to be violative of Article 19(1)(g)
of the Constitution and the question of such statutory provision being violative of Article 302 of the Constitution and in teeth of Article 13 of the
Constitution of India does not arise at all. The Court further stated that the submission that the requirement of Section 16(4) being directory and not
mandatory is not at all tenable in view of the clear language used in Section 16 of the Act. The concession of ITC under Section 16(1) is dependent
upon the fulfillment of requisite conditions laid down under various provisions including sub-section (4) thereof.
-Thus, Court held that Section 16(4) is constitutionally valid and is not violative of Articles 19(1)(g) and Article 300-A of the Constitution of India. The
said provision is not inconsistent with or in derogation of any of the fundamental right guaranteed under the Constitution of India

3

Claim of Input Tax
Credit raised by the
petitioner cannot be
sustained when the
supplying/selling dealer
has not paid up the
amounts to the
Government; despite
collection of tax from
the purchasing dealer.

Aastha Enterprises
v. State of Bihar
[2023] 153
taxmann.com 491
(Patna

-The Court by observing the decision of Apex Court in the matter of The State of Karnataka v. M/s. Ecom Gill Coffee Trading Private Limited stated
that the said decision can be distinguished especially looking at section 70 of the KVAT Act and also petitioner having to produce not only the invoices
but also the account details and the documents evidencing transportation of goods. However, this did not absolve the assessee from the rigor provided
under Section 16(2)(c). This provision in effect casts a burden of proof on the purchasing dealer who claims ITC, which is a right created under statute;
sustained only under the specific terms of the statute.
-The benefit to claim ITC is one conferred by the statute and if the conditions prescribed in the statute are not complied; no benefit flows to the
claimant.
-The contention of double taxation was negated by the Court since the claim was denied only when the supplier who collected tax from the purchaser
failed to pay it to the Government.
-Further contention raised was regarding measures provided to recover the collected tax, which selling dealer failed to pay to the Government. The
mere fact that there is a mode of recovery provided under the statute would not absolve the liability of the tax payer to satisfy the entire liability to the
Government. The purchasing dealer being the person who claims ITC could only claim the benefit if the supplier who collected the tax from the
purchaser has paid it to the Government and not otherwise.
-The Government definitely could use its machinery to recover the amounts from the selling dealer and if such amounts are recovered at a later
point of time, the purchasing dealer who paid the tax to its supplier could possibly seek for refund. However, as long as tax paid by the purchaser to
the supplier, is not paid up to the Government by the supplier; the purchaser cannot raise a claim of ITC under the statute.
-When supplier fails to comply with the statutory requirement, the purchasing dealer cannot, without credit in his account claim ITC and the remedy
available to the purchasing dealer is only to proceed for recovery against the seller. Even if such recovery from the supplier is affected by the purchasing
dealer; the State would be able to recover the tax amount collected and not paid to the exchequer, from the selling dealer since the rigor of provisions
for recovery on failure to pay up, after collecting tax, enables the Government so to do.
-Therefore, there should be credit available in the credit ledger of the purchaser to claim Input Tax and otherwise the claim would be frustrated. On
the above reasoning, it was held that the claim of ITC raised cannot be sustained when selling dealer has not paid up the amounts to the Government;
despite collection of tax from the purchasing dealer