ITC not allowed to buyer if supplier did not pay GST to the Government

Last updated: 23 August 2023

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The Patna High Court has ruled that a buyer cannot claim Input Tax Credit (ITC) if their supplier collects the GST but fails to pay it to the government. The court emphasised that ITC is a concession, not a right, and the buyer bears the responsibility to prove the supplier has paid the tax. If the supplier defaults, the buyer's recourse is to recover the amount from the supplier directly.

Court :
Patna High Court

Brief :
The Hon'ble Patna High Court in M/s. Aastha Enterprises v. State of Bihar [CWJ 10395 of 2023 dated August 18, 2023] held that ITC is in the nature of a benefit/concession and not a right extended to the assessee under the statutory scheme.The ITC to purchasing dealer will depend not only upon the collection by the seller but also the due payment by the seller to the Government and the burden of proof lies with the assessee to substantiate that the tax collected has been paid to the government by the supplier.

Citation :
CWJ 10395 of 2023 dated August 18, 2023

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Judgement posted by

Bimal Jain

Service

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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