No Denial of ITC Merely Because the Supplier Failed to File Returns and Pay Taxes

In a recent case before the Hon’ble Uttarakhand High Court, the issue of denying Input Tax Credit (ITC) to a purchasing dealer due to the supplier’s failure to file returns and pay taxes was examined. This article provides an overview of the case, highlighting the facts, issues, and the court’s decision.

Introduction

The case of Subhash Singh v. Deputy Commissioner, SGST revolved around the denial of ITC to a purchasing dealer, Subhash Singh, on the grounds that the supplier failed to fulfill their tax obligations. The court’s decision sheds light on the interpretation of relevant provisions under the Central Goods and Services Tax Act, 2017 (CGST Act) and the Uttarakhand Goods and Services Tax Act, 2017 (Uttarakhand GST Act).

Facts of the Case

Subhash Singh, engaged in the retail and wholesale business of iron scrap and waste, had availed ITC for the tax period April 2021 to March 2022 based on invoices and payments made to the supplier, M/s Dev Bhoomi Spat. Despite Subhash Singh’s compliance with GST regulations, the respondent (Revenue) raised a demand against him, alleging fraudulent availing of ITC due to the supplier’s non-compliance with tax obligations.

Issue

The primary issue before the court was whether the denial of ITC to Subhash Singh was justified solely based on the supplier’s failure to file returns and pay taxes.

Held

The Hon’ble Uttarakhand High Court, in Special Appeal No.100 of 2024 dated May 03, 2024, delivered the following judgment: