In a writ petition filed before the Gauhati High Court by a proprietorship firm registered under the Central Goods and Services Tax Act, 2017, against a notice demanding payment of tax, a Single Judge Bench of Justice Devashis Baruah set aside and quashed the order dated 10-04-2024 demanding Rs. 1,60,506/- for CGST and Rs. 1,60,506/- for SGST.
During 2017-18, the petitioner purchased generators worth Rs. 9,44,000/- from respondent 4 out of which Central Goods and Services tax (CGST) and Assam Goods and Services Tax were Rs. 72,000/- each. The payment was made. On 30-09-2023, the petitioner was issued a show cause notice stating that he was liable to make payment of tax and interest along with penalties on the question of excess Input Tax Credit claimed.
The petitioner submitted a reply explaining the ITC claimed, but an order was passed that the petitioner was liable to pay tax of Rs. 2,08,802/-, interest of Rs. 2,16,632/-, and a penalty of Rs. 20,880/-. The petitioner filed an application for rectification on 29-01-2024 and explained that there were no dues to be paid by the petitioner as there was no claim for excess ITC. Thereafter, the respondent authorities passed a rectified order dated 10-04-2024 wherein all claims of the petitioner were accepted except the claim of ITC. Aggrieved, the present petition was instituted.
The Court found that since respondent 4 did not file the returns, the ITC amount was claimed from the petitioner who was the purchasing dealer. It was found that the affidavit-in-opposition was filed without considering the judgment of National Plasto Moulding v. State of Assam & Ors. 2024 GAU-AS:7506-DB. Considering that respondent 4 had received the GST amount, but had not filed the returns, the Court opined that the imposition of ITC or holding that the petitioner had made excess claim of ITC was contrary to the law laid down in National Plasto Moulding (supra).
The Court also referred to On Quest Merchandising India Pvt. Ltd. v. Govt. of NCT of Delhi & Ors. 2017 SCC OnLine Del 11286, and found it clear that while reading the expression “dealer of class of dealers” in Section 9(2)(g) of the Delhi VAT Act, the Department is precluded from invoking Section 9(2)(g) of the DVAT to deny ITC to a purchasing dealer who has bona fide entered into a purchase transaction with a registered selling dealer who had issued a tax invoice reflecting the TIN number. It was also found that if the selling dealer had failed to deposit the tax collected by him from the purchasing dealer, the remedy for the Department would be to proceed against the defaulting seller dealer to recover such tax and not deny the purchasing dealer the ITC.
The Court disposed of the writ petition by interfering with the demand made from the petitioner while quashing and setting aside the impugned order dated 10-04-2024. However, the said setting aside was not to preclude respondent authorities from initiating steps for recovery against respondent 4 as per the Assam Goods and Services Tax Act, 2017 as well as the Central Goods and Services Tax Act, 2017.
