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The Petitioners were purchasers of goods and services. The Respondent refused to grant ITC on the said goods, basis the facts that the suppliers from whom the Petitioners claimed to had purchased the said goods was all fake and non-existing and the bank accounts opened by those suppliers was fake as well. Therefore, the documents submitted by the Petitioners were not accepted by the Respondent.

The Petitioners were purchasers of goods and services. The Respondent refused to grant ITC on the said goods, basis the facts that the suppliers from whom the Petitioners claimed to had purchased the said goods was all fake and non-existing and the bank accounts opened by those suppliers was fake as well. Therefore, the documents submitted by the Petitioners were not accepted by the Respondent.

Basis the documents submitted by the Petitioners, the Calcutta HC observed that the at the time of the transaction, the suppliers were genuine and valid by relying upon all the supporting relevant documents required under law and the Petitioner with their due diligence had verified the genuineness and identity the names of the suppliers as registered taxable person. Further observed that the supplier was available at the Government portal showing their registrations as valid and existing at the time of transactions. 

In the view of the above observations, the Calcutta HC held that it cannot be said that there was any failure on the part of the Petitioners in compliance of any obligation required under the statute before entering the transactions in question or for verification of the genuineness of the suppliers in question. The case was disposed of by the Respondent concerned in accordance with law.

LGW Industries Limited & Ors. [2021-TIOL-2308-HC-KOL-GST]

Authors’ Notes:

As a matter of principle, credit cannot be denied to recipient on default of compliances by the supplier. It shall be noted that the Delhi HC in RE: Arise India Limited [TS-314-HC-2017-DEL-VAT] had held Section 9(2)(g) of Delhi VAT Act to the extent it disallows ITC to purchaser due to default of selling dealer in depositing tax, as violative of Articles 14 and 19(1)(g) of the Constitution of India. Thereafter, the Revenue had also preferred an SLP before the SC, against the Delhi HC judgement. The same came to be dismissed by the Apex Court in RE: 2018-TIOL-11-SC-VAT.

Disclaimer:

The information provided in this update is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This update is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi judicial authorities may not take a position contrary to the views mentioned hereinrra quis.