No ITC Allowed if Supplier Didn’t Pay GST to Government Even if Tax Was Collected From Buyer | Patna HC

Case Details: Aastha Enterprises v. State of Bihar - [2023] 153 taxmann.com 491 (Patna)

Judiciary and Counsel Details

• • K. Vinod Chandran, CJ. & Partha Sarthy, J.
  • Mrs Archana Sinha, Adv. for the Petitioner.
  • Vivek Prasad for the Respondent.

Facts of the Case

In the present case, the purchases were made by the petitioner from supplier after making payments through bank accounts. However, the selling dealer had not paid up the tax liability to the Government and the department denied Input Tax Credit (ITC) to the petitioner. It filed writ petition and contended that the department should proceed against the selling dealer to recover the collected amount of tax.

High Court Held

The Honorable High Court noted that for availment of ITC, its conditions are to be strictly followed by the purchaser and the purchasing dealer could only claim ITC benefit if supplier who collected tax from the purchaser has paid it to Government and not otherwise. Moreover, as long as the tax paid by the purchaser to the supplier, is not paid up to the Government by the supplier; the purchaser cannot raise a claim of Input Tax Credit under the statute.

The Court further noted that mere production of a tax invoice, establishment of movement of goods and receipt of same and consideration having been paid through bank accounts would not enable ITC. Therefore, it was held that claim of ITC raised by the petitioner cannot be sustained when supplying/selling dealer had not paid up the amounts to Government; despite collection of tax was done from the petitioner.