WHETHER ITC SHOULD BE DENIED TO RECEIPIENT ON THE FAULT OF SUPPLIER?

ISSUE: WHETHER ITC SHOULD BE DENIED TO THE RECIPIENT ON THE FAULT OF THE SUPPLIER?

Facts:

As per section 16(2) the registered person will be entitled to ITC on supply only if following condition are satisfied:

• A Registered person must be in possession of Tax Paying Document
• There must be actual receipt of Goods and/or Services
• The supplier must have actually paid the Tax to Government for which ITC is taken
• The registered person availing the ITC must have filled the Return

Grounds:

In the case of Arise India Ltd VS Commissioner of Trade and Taxes, Delhi High Court Rules that Section 9(2)(g) of Delhi VAT to the extent it disallows input tax credit to purchase due to default of selling dealer in depositing tax is violating article 14 and article 19(1)(g) of constitution of india.

Article 14 of Indian Constitution talks about fundamental Right i.e. Right to Equality. The section is violative as it treats both the innocent recipient and guilty purchaser alike. So by Treating unequals equally the legislative measure is violating Article 14 of the Consitution. Article 19(1)(g) of the constitution talks about fundamental Right to carry on business.

There is legal Term called “LEX NON COGIT AD IMPOSSIBILIA” meaning of this term is that law can not compel a men to do something he can not possibly perform.

Also Apex court in the case of M/S.Kay Kay Industries Versus Commissioner of central Excise, Jalandar that recipient can not be denied ITC on the fault of supplier.

Also recipient has duly made the payment to the supplier. It Is supplier duty to pay the tax to the government. The government should initiate action against supplier before harassing to recipient.

Conclusion

So based on above context ITC can not be denied to Receipient on the fault of supplier. If we are denying ITC than it means we are also denying purchase and we are considering It as a bogus purchase which is actually not in every case.

from Studycafe https://ift.tt/3xVDjBz