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SGST High Court Cases

GST - Section 16(2)(c) of the CGST Act, 2017 - Eligibility to Input Tax Credit, Non-payment of tax by supplier, Burden of Proof - Petitioner claimed input tax credit on purchases made from supplier whose registration was cancelled – Dept issued show-cause notice to the petitioner under Section 74(1) of the Act alleging that the tax charged in respect of the supply had not been actually paid to the Government by the supplier, as required under Section 16(2)(c) of the Act - Whether the petitioner is entitled to claim the ITC when the supplier had not deposited the tax with the Govt – HELD - The Section 16(2) of the CGST Act clearly provides that a registered person shall not be entitled to the credit of any input tax unless the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply. The scheme of the Act is to prevent fraudulent transactions and bogus claims of ITC and various safeguards have been put in place, including the requirement of actual payment of tax by the supplier - in the present case, the petitioner could not demonstrate before the taxing authorities or the Court that the tax was, in fact, deposited by the supplier pursuant to the issuance of the tax invoice. The findings of fact by the taxing authorities that the supplier had not deposited the tax do not require any interference by the Court - the Supreme Court in the case of The State of Karnataka vs. M/s Ecom Gill Coffee Trading Private Limited held that the burden of proving the correctness of the ITC claim lies on the purchasing dealer and mere production of invoices or payment by cheque is not sufficient to discharge this burden - Once the supplier has not deposited the tax mandated under sub-section (2)(c) of Section 16 of the CGST Act, the purchaser cannot claim the benefit of input tax credit – The impugned order is confirmed and the writ petition is dismissed
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