2026-VIL-312-KAR
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SGST High Court Cases

GST – Reading down of Section 16(2)(c) of the CGST Act, 2017, Benefit of ITC to bonafide recipient – Challenge to Constitutional validity of Section 16(2)(c) of the CGST/KGST Act, 2017 and Rule 36(4) of the CGST/KGST Rules, 2017 contending that the impugned provisions cast an impossible burden on purchasing dealer for claiming Input Tax Credit to ensure payment of tax by the suppliers and ensuring timely filing of the returns by the supplier – HELD – The Division Bench of Tripura High Court in Sahil Enterprises, while coming to the conclusion that the impugned provisions were not violative of Articles 14, 19(1)(g), 265 and 300A of the Constitution of India, held that Section 16(2)(c) ought not to be interpreted to deny ITC to bonafide purchasers and it should be read down and applied only where the transaction is found not to be bonafide or is a collusive fraudulent transaction to defraud the Revenue - Respectfully agreeing with the view taken by the Division Bench of the Tripura High Court in the case of M/s Sahil Enterprises Vs. Union of India and others, the present petition also deserves to be disposed of in terms of the said judgment as well as the earlier judgment of the Gauhati High Court in National Plasto Moulding case - The provisions of Section 16(2)(c) of the CGST Act/KGST Act and Rule 36(4) of the CGST/KGST Rules are read down in a manner that allows the benefit of ITC to bonafide recipients who have complied with all other conditions under Section 16(2) despite any fault / lapse or non-payment of tax to the Government by the suppliers – The petition is disposed of
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