2026-VIL-262-GSTAT-PUN
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  2. 2026-VIL-262-GSTAT-PUN

SGST Tribunal

GST - Denial of Input Tax Credit on invoices of a supplier whose registration was cancelled with retrospective effect - Burden of proof under Section 155 of the CGST Act, 2017 - Appellant availed Input Tax Credit on invoices of a supplier whose registration stood cancelled with retrospective effect - The SCN under Section 73(1) proposed recovery on the footing that the tax charged may not have been paid to the Government, so that Section 16(2)(c) was not satisfied - The FAA upheld the demand as the Appellant produced no tax invoices, proof of payment or supplier's certificate - Whether denial of Input Tax Credit with interest calls for interference - HELD - Section 155 casts the burden of proving eligibility for Input Tax Credit on the person claiming it. The ground was pleaded as a bare assertion, and no invoice, record of payment to the supplier, evidence of transport or receipt of goods or ledger of the supplier was filed even at the hearing. The Appellant had since paid the tax and on this record had not discharged the burden. The Tribunal therefore did not decide whether retrospective cancellation of a supplier's registration can by itself justify denial of credit - Denial of credit with interest is upheld - Interest on Input Tax Credit where the supplier is not paid within 180 days - Second proviso to Section 16(2) of the CGST Act, 2017 and Rule 37 of the CGST Rules, 2017 as they stood for 2018-19 - The SCN proposed recovery of interest on Input Tax Credit relating to supplies for which the suppliers were not paid within 180 days, which was confirmed under Section 50(3) and upheld by the FAA - Whether the Appellant is liable to interest for not paying its suppliers within one hundred and eighty days - HELD - The authorities quoted the proviso and the Rule in their amended forms, which do not apply to the period, that does not, however, assist the Appellant. The SCN set out the provisions as they stood for that period. Under them, where a recipient did not pay the supplier within one hundred and eighty days, an amount equal to the credit was to be added to its output tax liability, with interest - The liability to interest arises under the Act itself, which provides that an amount equal to the credit shall be added to output tax liability along with interest, leaving only the manner to the Rules. Non-operation of Form GSTR-2 affected only the mode of reporting, since returns were furnished in Form GSTR-3B which provided for reversal of credit, and any amount due could be paid voluntarily under Section 73(5) with intimation in Form GST DRC-03. The Appellant did not attempt to reverse the credit or pay the interest, so the maxim that law does not compel the impossible has no application - Reading Rule 37(3) to extinguish interest where the amount was never added would let a recipient benefit from its own default, as the sub-rule runs interest from the date of availing credit and assumes compliance with sub-rules (1) and (2). Subsequent payment to suppliers does not assist, since the failure contemplated is failure to pay within one hundred and eighty days and the third proviso permits re-availment of credit on payment. The period is fixed by the proviso and cannot be enlarged by agreement between supplier and recipient - The interest is payable and the demand is upheld.
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