The court ruled that deemed receipt of goods is sufficient for claiming Input Tax Credit under CGST, emphasizing the need for agreements regarding direct deliveries to consumers.

JUDGMENT

(Per: HONOURABLE MR. JUSTICE P. B. BAJANTHRI)

Date : 11-04-2025

In these bunch of petitions, petitioners are stated to be registered dealers. They had claimed Input Tax Credit (for short ‘ITC’) under Section 16 (2) of the Central Goods and Services Tax Act, 2017 (for short ‘CGST Act’) / Bihar Goods and Services Tax Act, 2017 (for short ‘BGST Act’) for a particular period and their claims have been rejected by the Deputy Commissioner of State Tax, Patliputra Circle, Central Division, Patna. Feeling aggrieved by the decision of the aforementioned Officer, they have availed statutory remedy of appeal before the appellate authority viz., Additional Commissioner of State Tax (Appeal), Central Division, Patna. The appellate authority has affirmed the decision of the Deputy Commissioner of State Tax in each of the cases. Hence, each of the petitioners have assailed the decisions of the aforementioned authorities.

2. For the purpose of factual aspects of the matter, the lead case is CWJC No. 17914 of 2023 in the matter of M/s Utkrisht Trade Solutions Pvt. Ltd. vs. The State of Bihar and Others. Brief facts of the case in M/s Utkrisht Trade Solutions Pvt. Ltd. vs. The State of Bihar and Others are as under :

Submissions on behalf of the petitioner

3. Learned senior counsel Mr. Tarun Gulati for the petitioner submitted that the petitioner has assailed the decision of the second respondent dated 14.01.2023 (Annexure P - 14) by which petitioner’s claim for ITC has been dismissed and further demand of Rs. 26,14,086/- is raised in the guise of rejecting ITC claim of the petitioner on the sole issue that whatever purchases of goods made from the supplier by the petitioner, there is no actual movement of goods in terms of Section 16 (2) (b) (i) of CGST Act / BGST Act. Thereafter, petitioner had preferred appeal before the appellate authority and it has been affirmed vide decision of the second respondent dated 07.10.2023 (Annexure P – 1).

4. It is submitted that under GST legislation, in the event of trading of goods, tax is chargeable when a purchaser purchases goods from a seller, he / she pays the tax for the value of goods as well as GST thereon. The GST actually paid by the purchaser to the seller is available as ITC to the purchaser which is used for discharging GST when the purchaser further releases these goods, resultantly, the effective tax on him / her is only on his value addition as the tax suffered in the previous transaction is available as a credit while discharging tax on further release. Overall condition for the claim of ITC under Section 16 of the CGST Act is that purchaser who has actually paid the tax to the seller and the seller had deposited the tax with the concerned government. It is submitted that petitioner had fulfilled the conditions stipulated under of the CGST Act for claiming CGST. Sole contention of the respondents is that there is no actual movement of goods from the seller to the purchaser, on the other hand, contention of the petitioner is that petitioner had directed the seller to deliver the goods to the end consumer, resultantly, actual goods movement from seller to the dealer like petitioner is not existing and it is not warranted. Such arrangement has been made to overcome certain issues to the extent that goods need not be delivered to dealer – petitioner from supplier and it could be delivered to the end consumer by supplier directly on the request of dealer – petitioner. Whereas transaction papers relating to purchase and payment of tax by the petitioner to the seller and in