HC Directed GST Authority to Refund Entire GST Amount to Assessee Since Supplier Didn’t Supply Goods & Advance Paid Back

Case Details: Nam Estates (P.) Ltd. v. Joint Commissioner of Commercial Taxes (Appeals-I) - [2024] 162 taxmann.com 302 (Karnataka)

Judiciary and Counsel Details

• • S.R. Krishna Kumar, J.
  • Smt. Krishika Vaishnav & A. Mahesh Chowdhary, Advs. for the Petitioner.
  • Hema Kuamar, AGA for the Respondent.

Facts of the Case

The assessee entered into an agreement with the vendor for the purchase of goods. The assessee paid an advance amount to the vendor and also paid the GST on such advance amount. The vendor paid the GST amount to the Government from the advance amount received from the assesse. However, the vendor did not supply the goods, and the agreement was cancelled. The assessee recovered the advance amount by encashing the bank guarantee furnished by the vendor.

Thereafter, the assessee applied for a refund of the GST paid on the advance amount. However, the refund application was rejected, and the assessee filed an appeal before the appellate authority, which was also dismissed. Aggrieved by the order, the assessee filed a writ petition before the Karnataka High Court.

High Court Held

The High Court held that the assessee was entitled to a refund of the GST paid on the advance amount. There was no liability to pay GST since the vendor did not supply the goods and the agreement was cancelled. Accordingly, the amount of GST paid by the vendor was to be refunded to the assessee.