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TMI Blog2025 (4) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Case No. 18497 of 2023 Civil Writ Jurisdiction Case No. 18662 of 2023 Civil Writ Jurisdiction Case No. 15 of 2024 Civil Writ Jurisdiction Case No. 136 of 2024 Civil Writ Jurisdiction Case No. 211 of 2024 Civil Writ Jurisdiction Case No. 312 of 2024 Civil Writ Jurisdiction Case No. 343 of 2024 Civil Writ Jurisdiction Case No. 345 of 2024 Civil Writ Jurisdiction Case No. 356 of 2024 Civil Writ Jurisdiction Case No. 430 of 2024 Civil Writ Jurisdiction Case No. 542 of 2024 Civil Writ Jurisdiction Case No. 549 of 2024 HONOURABLE MR. JUSTICE P. B. BAJANTHRI And HONOURABLE MR. JUSTICE ALOK KUMAR SINHA For the Petitioners : Mr. Mrigank Mauli, Sr. Advocate Mr. Brisketu Sharan Pandey, Advocate Mr. Abhishek Kumar, Advocate Mr. Madan Kumar, Advocate For the Respondents : Mr. Vikash Kumar, SC 11 For UOI : Dr. K.N. Singh, ASG Mr. Anshuman Singh, Advocate JUDGMENT ( Per : HONOURABLE MR. JUSTICE P. B. BAJANTHRI ) In these bunch of petitions, petitioners are stated to be registered dealers. They had claimed Input Tax Credit (for short 'ITC') under Section 16 (2) of the Central Goods and Services Tax Act, 2017 (for short 'CGST Act') / Bihar Goods and Services Tax Act, 2017 (for short 'BGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices in GST DRC-01 and the show cause notices ("SCNs") under Section 73(1) of the Act for the relevant period was served upon the Petitioner. (Annexure - 12) 12.01.2023 The Petitioner replied to the aforesaid SCN once again disputing the entire tax demanded by the Respondent No. 2 (Annexure-13) 14.01.2023 The Respondent No. 2 passed the Orders under Section 73(9) of the CGST Act for the relevant period and directed the Petitioner to deposit the tax due amounting Rs. 26,14,086/- Rs. 7,45,014/- and Rs. 2,61,410/- (Annexure - 14) 20.02.2023 Recovery proceedings under Section 79 was initiated by the Respondent No. 2 by issuing FORM GST DRC-13 to the bank of the Petitioner. (Annexure - 15) 25.02.2023 The Petitioner requested Respondent No. 2 to remove lien created on the bank accounts and also submitted that the statutory timeline to file the appeal against the Adjudication Order has not lapsed. (Annexure - 16) 09.03.2023 The Petitioner being aggrieved of the Order, filed an appeal before the Respondent No. 2 under Section 107 of the CGST Act. (Annexure - 17) 11.08.2023 The Respondents filed response to the grounds raised by the Petitioner. (Annexure - 18) 21.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be delivered to the end consumer by supplier directly on the request of dealer - petitioner. Whereas transaction papers relating to purchase and payment of tax by the petitioner to the seller and in-turn seller had remitted tax to the government, therefore, denial of ITC to the petitioner is on flimsy ground. The respondents have not disputed that the petitioner had paid tax to the seller and inturn seller had paid tax to the government. In such circumstances, there is no point in verifying whether goods were received by the dealer physically or not? 5. In the impugned order, concerned authority has taken note of two decisions namely Aastha Enterprises vs. The State of Bihar and Another passed in CWJC No. 10359 of 2023 and judgment of the Hon'ble Supreme Court in the case of State of Karnataka vs. M/s Ecom Gill Trading Private Limited reported in 2023 SCC OnLine SC 248 and further counter affidavit and supplementary counter affidavit have been filed in improving the impugned orders to the extent that deeming provision under Section 16 (2) (b) of CGST Act is for 'bill to ship transaction', which is not the model followed by the petitioner and the business model claimed to be foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dealer need not be physically delivered to him, on the other hand, manufacturer/seller on purchase of goods by the dealer and on instruction of dealer, purchased goods could be delivered to the end purchaser. In the light of the aforementioned position that goods purchased by the petitioner - dealer from supplier/manufacturer and on instruction of dealer to the manufacturer/supplier, purchased goods could be delivered to the end purchaser or consumer is the position in the present case, therefore, petitioner is entitled to claim ITC and rejection of his claim is liable to be set aside and further direction may be issued insofar as claim of ITC. Submissions on behalf of Respondent - State 9. Learned counsel for the respondent - State contended that under Section 16 (2) (b) read with Section 31 of the CGST Act relating to Tax Invoice, movement of goods from supplier to dealer are mandatory. In support of the aforementioned contention he relied on a decision namely State of Karnataka vs. M/s Ecom Gill Trading Private Limited. He also relied on supplementary counter affidavit filed on behalf of respondent No. 2, in particularly, paragraph Nos. 6 and 22 read with Section 35 and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and conditions for taking Input Tax Credit, Section 31 relates to Tax Invoice, Section 35 relates to Accounts and other records and Section 155 relates to Burden of Proof of CGST Act. Learned senior counsel for the petitioner submitted that impugned orders are liable to be set aside on the sole issue that Section 16 (2) (b) namely '(b) he has received the goods or services or both', receipt of goods in physical mode is not mandatory, since receipt of goods is to be interpreted in what mode viz, visible or invisible on behalf of dealer - petitioner from the supplier. Extract of the aforementioned provisions are as follows : "16. Eligibility and conditions for taking input tax credit (1) - Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. 16 (2) (b) he has received the goods or services or both. Underline Supplied [Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance of certificate of registration and in such manner as may be prescribed, issue a revised invoice against the invoice already issued during the period beginning with the effective date of registration till the date of issuance of certificate of registration to him; (b) a registered person may not issue a tax invoice if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed; (c) a registered person supplying exempted goods or services or both or paying tax under the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed: Provided that the registered person may not issue a bill of supply if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed; (d) a registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suance of tax invoice within the prescribed period showing the prescribed particulars. This clause also empowers the Government to specify services, for which any other document issued in lieu of tax invoice, shall be deemed to be tax invoice and also specify services where no tax invoice is required to be issued. This clause provides for issue of documents other than tax invoice in certain cases. ( Notes on Clauses ). 35. Accounts and other records -(1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of-- (a) production or manufacture of goods; (b) inward and outward supply of goods or services or both; (c) stock of goods; (d) input tax credit availed; (e) output tax payable and paid; and (f) such other particulars as may be prescribed: Provided that where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business: Provided further that the registered person may keep and maintain such accounts and other particulars in electronic fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintain specified records. This clause empowers the Commissioner to notify a class of taxable persons to maintain additional accounts in other prescribed manner. This clause provides that every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant. (Notes on Clauses). 155. Burden of proof - Where any person claims that he is eligible for input tax credit under this Act, the burden of proving such claim shall lie on such person. This clause provides that the burden of proving rightful claim of input tax credit will lie on the person claiming the credit. (Notes on clauses)." 14. Respondent - State relied on two decisions namely in the case of Aastha Enterprises (cited supra) and in the case of State of Karnataka (cited supra), It is necessary to reproduce paragraph No. 15 of the aforementioned judgment in the case of State of Karnataka vs. M/s Ecom Gill Trading Private Limited and it reads as under : "15. Thus, the provisions of Section 70, quoted hereinabove, in its plain terms clearly stipulate that the burden of proving that ITC claim is correct lies upon the purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler and the supplier. On purchase of goods from the supplier, supplier was requested to deliver the goods to the end consumer directly, resultantly, there is no physical movement of goods to the petitioner from the supplier. This has not been appreciated by both the authorities in their impugned orders. In fact, respective contentions urged by the petitioners have not been appreciated and not dealt with, to that extent there is total non-application of mind. Whatever documents demanded by the authorities have been furnished from time to time with reference to their show cause notices and other communications. The cited two decisions namely in the case of Aastha Enterprises and State of Karnataka (cited supra) by the authorities have no application to the case in hand. They are distinguishable. Learned senior counsel heavily relied on latest Circular dated 31.12.2024 to the effect that goods need not be physically delivered to the dealer by the supplier on an understanding between the dealer and supplier, the supplier could deliver the goods directly to the end consumer on instruction. In the present case, situation is on par with the Circular, therefore, petitioner is entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to Section 16 (2) (b) of CGST Act, the goods shall be deemed to be received by the registered person where : * the goods are delivered by the supplier to a recipient or to any other person on the direction of such registered person, whether acting as a agent or otherwise; * such direction may be given before or during movement of goods; and * the goods may be delivered either by way of transfer of document of title to goods or otherwise. 19. 'Received' - goods or services. This means that without the receipt of goods or services, ITC cannot be availed. The term 'received' is essential for establishing eligibility under the law. Explanation of 'deemed receipt' scenarios - The explanation under Clause (b) of sub-Section (2) of Section 16 of CGST Act expands the interpretation of 'received' to include specific situations where the registered person may not have physical possession of the goods. Goods are deemed to be 'received' under the following conditions - (a) When the supplier delivers the goods to a transporter or another person on the registered person's instructions, either before or during the movement of goods. (b) When delivery of goods is confirmed through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsumer so as to complete the transactions relating to purchase of goods by the dealer from the supplier and further selling the goods to the end consumer and receipt of goods or not? 21. The cited decisions on behalf of the respondents are not assisting having regard to the issue involved in the present lis. The cited decisions are not relating to interpretation of Section 16 (2) (b) of CGST Act insofar as receipt of goods in the physical mode or not read with the fulfilling other conditions. In the case of Aastha Enterprises (cited supra), supplier had not deposited tax collected from the purchaser to the concerned government and it is mandatory. In the present case, the supplier is stated to have deposited tax collected from the petitioner and it is not disputed by the State - respondent. 22. In the light of these facts and circumstances, petitioner has made out a case so as to interfere with the impugned orders dated 14.01.2023 (Annexure - P 14) and 07.10.2023 (Annexure - P 1) and they are set aside. Matter is remanded to the second respondent - the Deputy Commissioner of State Tax, Patliputra Circle, Central Division, Pant Bhawan, Bailey Road, Patna to undertake fresh exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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