SLP Dismissed Against HC Order Where Demand of ITC Reversal Was Set Aside Holding that Investigation Against Supplier is a Pre-requisite

Case Details: Assistant Commissioner of State Tax v. Suncraft Energy P. Ltd - [2023] 157 taxmann.com 352 (SC)

Judiciary and Counsel Details

• • Mrs. B. V. Nagarathna & Ujjal Bhuyan, JJ.
  • Maninder Acharya, Sr. Adv., Ms Madhumita Bhattacharjee, AOR, Ms Urmila Kar Purkayastha, Adv., Ms Niharika Singh, Adv., Akash Mohan Srivastav, Adv., Ms Srija Choudhury, Adv. for the Petitioner.
  • Ankit Kanodia, Adv., Ravi Bharuka, AOR, Ms Megha Agarwal, Adv. for the Respondent.

Facts of the Case

The taxpayer was asked to reverse the Input Tax Credit (‘ITC’) on the supplies on which the tax was alleged to be not paid by the supplier. The department contended that the ITC was not getting reflected in Form GSTR-2A of the taxpayer, hence, the condition of Section 16(2) of the CGST Act, 2017 was not met and the ITC was required to be reversed. Calcutta High Court noted that the taxpayer has produced the tax invoice, the bank statement proving that they have made payment in respect of the supplies and tax to the seller thereby demonstrating that all other conditions of 16 of the CGST Act are satisfied.

Further, no action was taken by the department against the supplier. It noted that where a tax is not paid by the supplier, an action is required to be taken against him first. Reversal of ITC by the recipient should be the last resort in extreme cases. Hence, the High Court set aside the demand order.

Supreme Court Held

Hon’ble Supreme Court held that having regard to the facts and circumstances of the case and that the amount of tax involved is on the lower side, it was inclined not to interfere in the matter and upheld the decision of the High Court.

List of Cases Reviewed

• • Suncraft Energy (P.) Ltd. v. Assistant Commissioner, State Tax [2023] 153 taxmann.com 81 (Cal.) (para 4) SLP dismissed.