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IN THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM & ARUNACHAL PRADESH)
Ashutosh Kumar, Arun Dev Choudhury
MCLEOD Russel India Limited – Appellant
Versus
Union of India, represented by the Secretary to the Government of India, Ministry of Finance, Department of Revenue, New Delhi – Respondent
| Table of Content |
|---|
| 1. questioning provisions of cgst act (Para 1 , 2) |
| 2. restrictions on input tax credit (itc) arbitrarily affect purchasers (Para 3 , 4 , 5 , 6 , 10) |
| 3. past provisions for itc under specific circumstances (Para 8 , 9 , 19) |
| 4. law allows conditions on itc entitlement (Para 12 , 14) |
| 5. read down provision of section 16 for bona fide purchasers (Para 20 , 21) |
| 6. judgment disposal in favor of the petitioner (Para 22) |
JUDGMENT :
Ashutosh Kumar, CJ.
The petitioner, a Public Limited Company, engaged in the business of production, blending and supply of tea in India and other countries, has questioned the validity of the provisions contained in Section 16(2)(aa) of the Central Goods and Services Tax Act, 2017 (hereinafter to be referred as the “CGST Act”) and Assam Goods and Services Tax Act, 2017 (hereinafter to be referred as the “AGST Act”).
2. The provision of Section 16 of the CGST Act, in its entirety, is being extracted herein below for ready reference:-
“16. Eligibility and conditions for taking input tax credit.— (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take c
Legislative provisions imposing conditions on Input Tax Credit eligibility based on supplier compliance are found iniquitous; bona fide purchasers must not be unduly penalized for supplier defaults.
Input tax credit claims require proof of actual tax payment by the supplier; failure to demonstrate this results in denial of credit.
[The judgment establishes that while Input Tax Credit (ITC) should not be denied solely based on procedural errors, strict compliance with the statutory provisions of the CGST Act is essential for av....
The first respondent was not justified in reversing the ITC availed by the appellant without conducting any enquiry on the supplier and without resorting to any action against the supplier.
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