2023 Taxo.online 721

“Landmark Ruling: High Court Confirms No Automatic Reversal of ITC from Buyer on Non-Payment of Tax by the Seller”

Court's Verdict on Input Tax Credit Reversal: A Detailed Analysis

Part 1: Introduction:

In this case, an intra Court appeal was filed by T.S. Sivagnanam, CJ., challenging the order passed by the Assistant Commissioner of State Tax, Ballygunge Charge, on 20-2-2023. The issue at hand was the reversal of Input Tax Credit (ITC) availed by the appellant under the provisions of the West Bengal Goods and Services Tax Act, 2017 (WBGST Act). The appellant, as a recipient, had made timely tax payments to the supplier (4th respondent) for the goods and services received. However, certain invoices from the supplier were not reflected in the appellant's GSTR 2A for the Financial Year 2017-18.

Part 2: Appellant's Contentions and Legal Basis:

The appellant argued that they had fulfilled all the conditions stipulated under Section 16(2) of the Act to avail ITC. These conditions include possession of valid tax invoices or debit notes, receipt of goods or services, payment of tax, and submission of the return under Section 39. The appellant further relied on the decision of the Hon'ble Supreme Court in Union of India (UOI) v. Bharti Airtel Ltd. (2022) 4 SCC 328, which supported their claim.

Additionally, the appellant referred to press releases issued by the Central Board of Indirect Tax and Customs (CBIC) on 18-10-2018 and 4-5-2018. The first press release clarified that furnishing outward details in Form GSTR-1 by suppliers and viewing them in Form GSTR-2A by recipients is for taxpayer facilitation and does not affect the taxpayer's ability to avail ITC based on self-assessment under Section 16 of the Act. ……………………………………….

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