2021 (6) TMI 1052 - HC - GST

Reversal of Input tax credit - non-payment of tax by the seller - HELD THAT - When the physical verification was offered to be made by petitioner it was not accepted. It is stated that for the recovery of like nature from the buyer, the action can only be available in the exceptional circumstances. A perusal of the notice and recovery order dated 22.01.2021 would show that the issue raised by the petitioner needs consideration - List it in the week commencing 02nd August, 2021.

Summary

Issues:
1. Denial of Input Tax Credit claimed by the petitioner due to discrepancies in GST filings by the seller.

Analysis:
The petitioner claimed Input Tax Credit (ITC) amounting to 95464.59 lakhs, but the 2A GST, ITC Form showed a lower amount of 86606.67 lakhs, resulting in a difference of 8857.91 lakhs along with interest. The petitioner argued that as per a Press Release of the GST Council, there should not be an automatic reversal of ITC of the buyer if the seller fails to pay taxes. The petitioner contended that recovery should be sought from the seller in such cases. However, the seller's filings did not match with the purchases made by the petitioner, indicating possible non-filing of returns by the seller. The petitioner offered physical verification, which was not accepted. Citing a judgment by the Madras High Court, the petitioner argued that recovery should be primarily from the seller, and action against the buyer should be exceptional.

The Union of India and the State Counsel requested time to file a reply. The notice and recovery order dated 22.01.2021 raised by the petitioner were found to warrant consideration. The petition was admitted for hearing, and the respondents were directed to file a reply within four weeks. The petitioner was instructed to deposit 5% of the demanded amount within 15 days to avoid coercive measures as per the order dated 22.01.2021. The case was scheduled for listing in the week commencing 02nd August 2021, as per court rules.