The Uttarakhand High Court in the case of SUBHASH SINGH VERSUS DEPUTY COMMISSIONER, STATE GOODS AND SERVICE TAX vide SPECIAL APPEAL NO. 100 OF 2024 dated 03.05.2024, has held that if the suppliers have not filed their returns, then proceedings under section 74 of the Goods and Service Tax, 2017, cannot be initiated against the appellant for availing the benefit of ITC in a fraudulent manner.

Facts of the Case:- The appellant is engaged in retail and wholesale business of iron scrap and waste. The appellant has purchased goods with proper invoices, made payments through banking channels, and paid applicable GST. The invoices and GST payments are recorded in the appellant's books of accounts. The appellant availed input tax credit (ITC) for the tax period April 2021 to March 2022 based on these transactions. All invoices and E-way bills reflected the payment of GST

The appellant's suppliers, specifically M/s Dev Bhoomi Spat, received GST from the appellant but may have defaulted in filing their returns.

The Department initially raised a demand of Rs. 79,41,598/- vide intimation dated 30.01.2023. Consequently, the demand got decreased to Rs. 19,47,801/- in the impugned order dated 22.06.2023.

The appellant asserts that the supplier has neither paid the tax nor filed returns, despite the appellant having proper invoices for purchases and having made payments based on these invoices. Further, the appellant argues that the supplier’s failure to file returns should not affect the appellant’s right to ITC.

Issue: Whether the appellant can be held liable and denied ITC if the suppliers have defaulted by not filing their returns.

Held:- The court stated that Proceedings under Section 74 of the Goods and Services Tax Act, 2017, cannot be initiated against the appellant for availing ITC if the appellant has purchased goods through proper invoices and made payments via banking channels along with applicable GST.

The Court considering the provisions of section 107 (6) (d) of the Uttarakhand Goods and Services Tax Act 2017, the order dated 07.03.2024, Annexure no. SA1, of the appeal, is being modified that since the appellant has produced all the invoices from the suppliers, and it was the duty of the suppliers to further file their returns, which they have not done, the order is being modified that appellant will deposit 10% of the amount, which is being demanded by the respondents.

To read the complete judgment 2024 Taxo.online 965