GST – Denial of ITC for Default of Seller to Deposit Tax
In this case, the summons were issued on the ground of availing ineligible ITC on invoices issued to some proprietorship firm without actual receipt of goods and without actual supply of goods.
The petitioner contended that full tax was paid to the supplier and the alleged failure of the suppliers to discharge their tax liability was entirely beyond the control of the petitioner.
e respondent authorities issued a search authorization and conducted a search at the business premises of the petitioner on 09.07.2019, wherein no incriminating materials were recovered or seized during the said search. The statement of the petitioner was recorded wherein he has explained the nature of his business, the manner of procurement and sale of scrap/waste batteries, source of purchase, transportation arrangements, storage practices and the mode of payment through banking channels by stating that the goods covered under the invoices were actually received and that due payments including GST were made to the suppliers.
held that where a purchasing dealer has entered into transactions bona fide with a registered supplier and has complied with the statutory requirements, denial of input tax credit solely on account of failure of the supplier to deposit tax would not be justified. The remedy of the Department, in such circumstances, lies against the defaulting supplier and not against a bona fide purchaser.
Order dated 5.6.2026 of the Gauhati High Curt in Case NO. WP (Civil) No.2960 of 2026 of M/s Metal Syndicate and others Vs. The Union of India and others
