TMI Blog2023 (3) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... states that notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless he has received the goods or services or both. From the perusal of provisions of the section 16(2)(c) CGST Act and PGST Act, it is very much clear that no registered person shall be entitled to take the credit of any input tax in respect of any supply of goods or services or both unless the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply. If the seller or preceding sellers have not deposited the tax either in cash or through utilization of input tax credit admissible in respect of the said supply, purchaser is not eligible to claim ITC on such supply. Thus, keeping in view the relevant provisions of Section 16(2)(c) of CGST Act read with PGST Act, there are no doubt in holding that the purchaser is not entitled to claim Input Tax Credit on the purchases made by it from the seller who had discharged its tax liability but the preceding seller has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s alloys, scrap, gas and other materials from within the State of Punjab. B. That the assessee is receiving the material against GST Invoice on which it is entitled to claim Input Tax Credit on the tax paid on the purchases made by it. The assessee is making the payments through banking channels and all the transactions are being reflected in its books of accounts. C. That in accordance with the provisions of Central GST Act, 2017 read with Punjab GST Act 2017, the assessee is filing its returns in form GSTR-3B and Form GSTR-1. Here it is pertinent to mention that the Central Govt, has abandoned the filing of Form GSTR-2 for the time being and the same is not being filed. As per the provisions of the Central GST Act, the sellers who had sold the goods to the assessee, the transactions of the same will be reflected in Form GSTR-2A in the account of the assessee at the GST Portal from which the assessee would come to know the Invoice No., Date, Invoice Value entered by the seller in its Returns and the status of the filing of the Returns by the seller. D. That recently, news are being published in the newspapers that the officials of the Department have unearthed the scam of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise: (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply: and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument, is furnished in FORM GSTR-2 by such person. (3) No input tax credit shall be availed by a registered person in respect of any tax that has been paid in pursuance of any order where any demand has been confirmed on account of any fraud, willful misstatement or suppression of facts. 2A. STATEMENT CONTAINING APPLICANT'S INTERPRETATION a) The assessee is procuring iron and steel scrap, ferrous alloys, gas and other materials for manufacturing of finished products. The said material is being received by the assessee against GST Invoice fulfilling all the particulars as prescribed under the Act and the payments are being made through banking channels. The assessee is duly filing its Returns i.e., in Form GSTR-3B and GSTR-1 reflecting all the transactions and accordingly discharging its tax liability. Insofar as the purchases are concerned, assessee is also verifying Form GSTR-2A which is a auto-populated Form generated in the account of GST Portal of the assessee whereby the transactions entered by the sellers of the assessee in respect of the assessee are being reflected. Accordingly, assessee verifies the same and if there is any discrepancy, the assessee gets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of India. The rule of interpretation requires that such meaning should be assigned to the provision which would make the provision of the Act effective and advance the purpose of the Act. This should be done wherever possible without doing any violence to the language of the provision. A statute has to be read in such a manner so as to do justice to the parties. If it is held that the person who does not deposit or is required to deposit the tax would be put in an advantageous position and whereas the person who has paid the tax would be worse, the interpretation would give result to an absurdity. Such a construction has to be avoided. In other words, the genuineness of the certificate and declaration may be examined by the taxing authority, but onus cannot be put on the assessee to establish the correctness or the truthfulness of the statements recorded therein. The authorities can examine whether the Form VAT C-4 was bogus and was procured by the dealer in collusion with the selling dealer. The department is required to allow the claim once proper declaration is furnished and in the event of its falsity, the department can proceed against the defaulter when the genuinen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nafide purchasing dealer. All this points to a failure to make a correct classification on a rational basis so that the denial of ITC is not visited upon a bonafide purchasing dealer. This failure to make a reasonable classification, does attract Invalidation under Article 14 of the Constitution, as pointed out rightly by learned counsel for the Petitioners. This is also what weighed with the Court in Shanti Kiran India Pvt. Ltd. (supra) where it was observed as under:- In the present case, Section 9 (1) grants- Input-tax credit to purchasing dealers. Section 9 (2), on the other hand lists out specific situations where the benefit is denied. The negative list, as it were, is restrictive and is in the nature of a proviso. As a result, this Court is of the opinion that the interpretation, placed by the Tribunal-that there is statutory, authority for granting input-tax credit only to the extent tax is deposited by the selling dealer, is unsound and contrary, to the, statute, It is also iniquitous because an onerous burden is placed on the purchasing dealer in the absence of clear words to that effect in the statute to keep a vigil over the amounts deposited by the selling d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey create and affirm demands created against the Petitioner purchasing dealers by invoking Section 9 (2)(g) of the DVAT Act for the default of the selling dealer, and which have been challenged in each of the petitions, are hereby set aside... e) Here it is also pertinent to mention that the assessee can only ensure that its seller had filed the Returns and reflected the transactions in question as the utility for the same has been provided at the GST Portal, or it can also procure the same from the seller. However, there is neither any obligation nor infrastructure to ascertain as to whether the seller had discharged its tax liability in accordance with law or not. It cannot also ascertain as to what product its seller is buying and selling or the preceding sellers of its seller had discharged their tax liabilities or not. Therefore, in the event of the same the assessee cannot be held liable and fastened upon the liability on account of its sellers or their preceding sellers. 3. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- Submissions by the Jurisdictional Authority: - The Assistant Commissioner of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt as well as Hon'ble Calcutta High Court have held that in case the seller has not paid the tax, the purchaser cannot be fastened upon the liability and have remanded back the matters to the respective Assessing Authorities to look into the matter. In the present case also, the assessee is in possession of all the requisite documents as prescribed in Section 16 read with Rule 36. The assessee is complying with all the conditions and therefore in case the seller of the assessee or preceding dealer of the seller of the assessee has not paid the tax, no proceedings could be initiated against the assessee for the said reason. 11. Recently, the Hon'ble Punjab and Haryana High Court in the case of M/s Shiv Enterprises versus State of Punjab and others, though deciding the issue of detention made on the basis of seller not paying the tax, observed that it is virtually impossible for a trader to ascertain as to whether the Input Tax has been paid by his predecessor or not and it is for this reason also, that the claim to Input Tax Credit has been made subject to scrutiny and assessment. It is a fundamental legal principle embedded in legal maxim lex non cogit ad impossibilia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (10) Copy of Judgement by Hon'ble Delhi High Court in the case of On Quest Merchandising India Private Limited v. Government of NCT of Delhi and Ors. (11) Copy of Judgement by Hon'ble Madras High Court in the case of D.Y. Beathel Enterprises v. the State Tax Officer (Date Cell) (Investigation Wing), (12) Copy of Judgment by Hon'ble Calcutta High court in the case of LGW Industries v. Union of India and Ors. (13) Copy of CWP in the case of M/s Shiv Enterprises v. State of Punjab Ors. 4A. Sh. Rishab Singla, Counsel of the applicant again appeared for personal hearing on 16.08.2022 and submitted the additional submissions vide mail dated 19.08.2022 as under: - a) The assessee has filed Application for Advance Ruling under Section 97 of the Punjab GST Act, 2017/Central GST Act, 2017. The said Application was listed for hearing on 16.08.2022, wherein an objection was raised with regard to maintainability of the Application in view of the scope of Section 97(2). b) In this regard it is submitted that the Application for Advance Ruling filed by assessee is maintainable as the case of the assessee falls under Section 97(2)(d) of the Acts ibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability under the Act? ii) If answer to the above is in negative, then how the purchaser will ensure that the tax liability has been discharged by all the sellers falling in the queue of the transaction? iii) Whether the purchaser would be eligible for the ITC since no infrastructure has been provided by the Govt, in order to ensure discharging of tax liability by the sellers falling in the queue of a transaction? iv) Whether the purchaser is entitled to claim Input Tax Credit on the purchases made by it from the seller in the event of non-payment of tax by the seller even though the purchaser is in possession of the invoice, other relevant documents and the payments have been made through banking channels and there is no connivance or collusion between the purchaser and seller? C. We have gone through the provisions of Section 97 whereunder the applicant is authorized to make an application vis-a-vis the four questions on which advance ruling has been sought, have revealed that out of four questions, Question no. 2,3 and 4 are not covered under the purview of Section 97(2)(d) of CGST Act and PGST Act. As these three questions are out of ambit of Section 97(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case may be, services- (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person; (ba) the details of input tax credit in respect of the said supply communicated to such registered person under section 38 has not been restricted; (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39 : Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of input tax credit admissible in respect of the said supply, purchaser is not eligible to claim ITC on such supply. E). Therefore, keeping in view the relevant provisions of Section 16(2)(c) of CGST Act read with PGST Act, we have no doubt in holding that the purchaser is not entitled to claim Input Tax Credit on the purchases made by it from the seller who had discharged its tax liability but the preceding seller has not discharged its liability under the Act. As regards Question no. 2,3 and 4, we have already held in Para 3 above that the same are not covered under the purview of Section 97(2) (d) of CGST Act read with PGST Act. 6. In view of the observations stated above, the following rulings are issued: RULING As per discussions made in the body of the order, the questions are answered as under: - Question 1. Whether the purchaser is entitled to claim Input Tax Credit on the purchases made by it from the seller who had discharged its tax liability but the preceding seller has not discharged its liability under the Act? Answer: No. As per provisions of Section 16(2)(c) of CGST Act read with PGST Act, the purchaser is not entitled to claim Input ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
