2025 (5) TMI 987 - HC - GST

Challenge to assessment order passed by respondent no. 3 assessing GST for the months of June-July 2018 under Section 74 of the GST Act - HELD THAT - It is emphasized that the provisions of Section 16 (2) (c) of the U.P. G.S.T. Act 2017 would not be attracted for reason that four places down the chain of transactions one of the suppliers had not paid GST. It is also emphasized that the tax invoices GSTR-2A records of payment through Bank are sufficient to comply with the requirement of Section 16 of the said Act and entitle the petitioner to claim benefit of the input tax credit. So far as the absence of the Toll Plaza receipt is concerned it is pleaded in paragraph no. 17 of the writ petition that the transaction relates to the year 2018 when every Highway did not have a Toll Plaza and alternate routes/non toll roads were available. It is also argued that the SIB search of the supplier who was found not to exist at his address was conducted by the respondents after one year of the transaction during which period of time the possibility of a change in the affairs of the supplier cannot be ruled out. Issue notice - List for orders on 25.09.2024 along with a report regarding status of pleadings.

Summary

The Allahabad High Court, through Hon'ble J.J. Munir, J., admitted a petition challenging an assessment order dated 24.08.2022 under Section 74 of the GST Act for June-July 2018. The petitioner contended entitlement to input tax credit despite the supplier (M/s Kali Traders) allegedly failing to deposit GST, emphasizing compliance with Section 16 of the U.P. GST Act, 2017 via tax invoices, GSTR-2A, and bank payment records. The petitioner argued that denial of credit solely because the supplier's registration was later cancelled or GST unpaid is impermissible, and that Section 16(2)(c) is inapplicable as the non-payment occurred further down the supply chain. The Court noted the absence of Toll Plaza receipts was explained by the 2018 context and that the supplier's non-existence at the recorded address was discovered only a year later. Finding a prima facie case, the Court stayed operation of the impugned orders dated 24.08.2022 and 23.02.2024, subject to the petitioner depositing 30% of the assessed tax after adjustment. Notice was issued to respondents with a three-week time to file counter affidavits, and the matter was listed for further orders on 25.09.2024.