ITC denied if buyer having knowledge of investigation going on against his supplier

Last updated: 16 August 2022

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The High Court of Madhya Pradesh has ruled that Input Tax Credit (ITC) can be denied if a buyer is aware that their supplier is under investigation. In this case, Dhara Enterprises attempted to claim ITC on supplies from V.K. Enterprises, but the court found that Dhara Enterprises had sufficient knowledge of the transactions being investigated. Therefore, their appeal to quash the tax liability and penalty was dismissed.

Court :
Madhya Pradesh High Court

Brief :
The Hon'ble High Court of Madhya Pradesh in the matter of M/s Dhara Enterprises v. Appellate Authority & Joint Commissioner [Writ Petition No.27676 of 2019 dated May 12, 2022] has upheld the order passed by the Revenue Department imposing the tax liability on the assessee is valid on the ground that the assessee was well aware with the transaction alleged as ineligible on which the benefit of Input Tax Credit ("ITC") was availed by him.

Citation :
Writ Petition No.27676 of 2019 dated May 12, 2022

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

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3 Years PLAN

4999

(Excl. of GST ₹899)

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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