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GST – Challenge to validity of the provisions of Section 16(2)(aa) of the CGST Act, 2017 - Eligibility and conditions for claiming input tax credit by bonafide purchaser – Petitioner case that Section 16(2)(aa) restricts the vested right of claiming ITC of a bona fide recipient merely due to the default of supplier to furnish the details of invoices or debit notes of such supply in GSTR-1 return - Whether the condition imposed under Section 16(2)(aa) of the CGST Act and AGST Act, making the availability of ITC to the recipient contingent on the supplier's compliance in furnishing the details of invoices or debit notes in GSTR-1, is arbitrary and unconstitutional – HELD - The object and purpose of the GST Act is to avoid any cascading effect of taxation and to charge tax only on the "value additions". The condition under Section 16(2)(aa) places an onerous burden on the purchasing dealer, as the availability of ITC is contingent on factors that are in the hands of the supplier and not the purchaser – The Section 16(2)(aa) imposes an impossible burden on the purchaser to verify the details furnished by the supplier in Form GSTR-1 and the auto-population of such details in the recipients GSTR-2A/GSTR-2B. Currently, the GST laws do not provide the purchaser with any such mechanism to take any action or non-disclosure of the invoice in Form GSTR-1 by the supplier though tax has been correctly paid by the supplier in GSTR-3B payment return. Thus, making the denial of ITC on account of non-reflection of invoice in GSTR-2A/GSTR-2B under the said clause to be arbitrary - The denial of the ITC to purchasing dealer for default of supplier would amount to shifting the incidence of tax from the supplier to the buyer, which is unconstitutional and against the scheme of GST Act – As the objective behind the provision is to prevent fraudulent ITC claims and promote supplier compliance, the Court refrains from holding the amendment in Section 16 to be unconstitutional, instead, the provision of Section 16(2)(aa) is read down to the extent that in case of the supplier acting truant, before denying the ITC benefits to a bona fide purchaser, the purchaser should be given an opportunity to prove their bona fides, which can be verified by the tax invoices and other documents. This reading down of the provision shall be applicable only until the CBIC comes up with a practical solution to address the issue of the availability of ITC to the bonafide purchaser being contingent on factors within the control of the supplier - The petition is disposed of
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