S.No

Case Subject

Case

Held

1

Before directing
the recipient to
reverse ITC, the
authority ought to
take action
against the
supplier and
unless and until
authority was able
to bring out
exceptional case
as clarified in the
press release
issued by CBIC,
straight away,
authority was not
justified in
directing the
appellant to
reverse the ITC

Suncraft Energy
(P.) Ltd. v.
Assistant
Commissioner,
State Tax [2023]
153
taxmann.com 81
(Calcutta

The allegation against the appellant was that the supplier has not shown the Bill in GSTR 1 and hence the appellant is not eligible to avail ITC as per section
16(2). SCN did not allege that appellant was not in possession of tax invoice and that the appellant has not received the goods or services or both.
The court referred to decision of Appex Court in the matter of Union of India (UOI) v. Bharti Airtel Ltd. [2022] 4 SCC 328 wherein effect and purport of Form
GSTR-2A was explained that it is only a facilitator for taking a confirm decision while doing such self-assessment. Non-performance or non-operability of Form
GSTR-2A will be of no avail because dispensation stipulated at the relevant time obliged registered persons to submit return on the basis of such selfassessment in Form GSTR-3B manually on electronic platform. The Court relied upon Arise India Ltd. v. Commissioner of Trade and Taxes, Delhi.
The Court referring to press release dated 18-10-2018 observed that the authority had not conducted any enquiry on supplier more particularly when
clarification has been issued where furnishing of outward details in Form GSTR 1 by a corresponding supplier and the facility to view the same in Form GSTR
2A by the recipient is in the nature of tax payer facilitation and does not impact the ability of the tax payers to avail ITC on self-assessment basis in consonance
with the provisions of section 16 of the Act. Furthermore, Press release dated 4
th May 2018 was also referred wherein it was clarified that there shall not be
any automatic reversal of ITC from buyer on non-payment of tax by seller and in case of default in payment of tax by seller, recovery shall be made from seller
however, reversal of credit from buyer shall also be an option available with the revenue authorities to address exceptional situations like missing dealer,
closure of business by supplier or supplier not having adequate assets etc.
Thus, it was held that the action of the proper officer was branded as arbitrarily as it carried without resorting to any action against the supplier and ignoring
the tax invoices produced by the appellant as well as the bank statement to substantiate that they have paid the price for the goods and services rendered as
well as the tax payable there on. Therefore, before directing the appellant to reverse ITC, the authority ought to have taken action against the supplier and
unless and until authority was able to bring out exceptional case where there was collusion between appellant and supplier or where supplier was missing or
supplier had closed down its business or the supplier did not have any assets and such other contingencies, straight away the authority was not justified in
directing the appellant to reverse the ITC. Therefore, demand raised on the appellant was held not to be sustainable. The order was set aside with a direction
to first proceed against supplier and only under exceptional circumstance as clarified in press release by CBIC, proceedings be initiated against appellant.

2

ITC not allowed
as tax cannot be
paid on invoices
issued post
cancellation of
registration of
supplier

Jai Balaji Paper
Cones v.
Assistant
Commissioner
Sales Tax [2023]
152taxmann.com
690 (Madras)

The case of the petitioner is that the petitioner has paid an amount of Rs.4,14,000/- to the supplier by including the GST payable of Rs.4,14,000/- on three
invoices. It was submitted that since the petitioner has paid the tax due to the supplier on invoice dated 23.11.2018, thus they cannot be asked to pay IGST.
The court by referring to Section 16(2) (c) of CGST Act, 2017 stated that a registered person is not entitled to credit of input tax in respect of any supply of
goods or services of both, if tax is not paid to the Government. The registration of the supplier was cancelled on 31.10.2018 before three invoices dated
23.11.2018 were raised. Thus, it was clear that supplier could not have paid the tax to the ex-chequer. Therefore, it was held that there cannot be a mandamus
to the authority contrary to the provisions of the respective GST Act of 2017 and the Rules made thereunder and the petition as dismissed. It was further stated
that the petitioner was however entitled to recover the amount from the suppliers in the manner known to law.

3

Time limit
prescribed for
claiming ITC u/s
16(4) is not
violative of
articles 14,
19(1)(g) and 300-
A of the
Constitution of
India.

[2023] 152
taxmann.com
640 (Andhra
Pradesh)
Thirumalakonda
Plywoods v.
Assistant
Commissioner -
State Tax

The Court observed that Section 16(2) does not appear to be a provision which allows input tax credit, rather ITC enabling provision is section 16(1). On the
other hand, section 16(2) restricts the credit which was otherwise allowed to only such cases where conditions prescribed in it were satisfied. Therefore, section
16(2) in terms only override the provision which enabled the ITC i.e., section 16(1). This is evident from the manner in which Section 16(2) is couched. The non
obstante clause in section 16(2) is followed by a negative sentence "no registered person shall be entitled to the credit of any input tax in respect of any supply
of goods or services or both to him unless". This negative sentence pellucidly tells that unless the conditions mentioned in section 16(2) are satisfied, no credit
will be eligible. This stipulation manifests that section 16(2) is not an enabling provision but a restricting provision. What it restricts is the eligibility which was
otherwise given U/s 16(1). Hence unless such clear inconsistency is established, overriding effect cannot be given over other provisions. In the present case
both Section 16(2) and (4) are two different restricting provisions, the former providing eligibility conditions and the later imposing time limit. Further, influence
of a non obstante clause has to be considered on the basis of the context also in which it is used. Therefore, section 16(4) being a non-contradictory provision
and capable of clear interpretation, will not be overridden by non obstante provision u/s 16(2). Thus, in substance it was held that section 16(1) is an enabling
clause for ITC; 16(2) subjects such entitlement to certain conditions; section 16(3) and (4) further restrict the entitlement given u/s 16(1). That being the scheme
of the provision, it is out of context to contend that one of the restricting provisions overrides other two restrictions. Another way of looking it was that if really
legislature had no intention to impose time limit, there was no necessity to insert Section16(4) and to further intend to override it through section 16(2).
The Court further observed that mere filing of the return with a delay fee will not act as a springboard for claiming ITC and referred to the argument by learned
Advocate General wherein it was stated that collection of late fee is only for the purpose of admitting the returns for verification of taxable turnover of the
petitioner but not for consideration of ITC. Such a statutory limitation cannot be stifled by collecting late fee.
The Court observed that ITC being a concession, the legislature is within its competency to impose certain conditions, including time prescription for availing
such right. Thus, time limit prescribed for claiming ITC u/s 16(4) is not violative of articles 14, 19(1)(g) and 300-A of the Constitution of India

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