Case Study: Denial of Input Tax Credit
In Case of Suncraft Energy Private Limited, Calcutta High Court had held that the reason for denying the input tax credit is on the ground that the detail of the supplier is not reflecting in GSTR 1 of the supplier. The Appellant are in possession of a valid tax invoice and payment details to the supplier have been substantiated by producing the tax invoice and the bank statement.
The respondent has not conducted any enquiry on the supplier more particularly when clarification has been issued that furnishing of outward details in Form GSTR 1 by the supplier and the facility to view the same in Form GSTR 2A by the recipient is in the nature of tax payer facilitation and does not impact the ability of the tax payers to avail input tax credit on self-assessment basis in consonance with the provisions of Section 16 of the CGST Act, 2017.
Furthermore, it was clarified that there shall not be any automatic reversal of input tax credit from buyer on non-payment of tax by seller. The respondent without resorting to any action against the selling dealer has ignored the tax invoices produced by the appellant as well as the bank statement to substantiate that they have paid the price for the goods and services rendered as well as the tax payable there on. The action of the respondent has to be branded as arbitrarily.
Therefore, before directing the appellant to reverse the input tax credit and remit the same to the government, the respondent ought to have taken action against the selling dealer.
The High Court said that demand raised on the appellant is not sustainable and set aside and the writ was allowed
Against the same, the Respondent (Revenue) filed a SLP before the Hon’ble Supreme Court and the same has was dismissed on the ground that the demand raised was on the lower side as the Apex Court exercised its powers under Article 136 of the Constitution of India.
This situation unravels a complex dilemma, placing an undue burden on honest taxpayers who find themselves shouldering the consequences of sellers neglecting their responsibility to remit taxes to the government. It is imperative that the Hon’ble Supreme Court provided a decisive and unambiguous verdict, clearly delineating its interpretation of the law to bring resolution to this intricate issue.
