Taxpayer made to suffer due to a supplier’s error in GSTIN reporting

[CA Bimal Jain]

The Hon’ble Madhya Pradesh High Court in AGRAWAL AND BROTHERS VERSUS UNION OF INDIA, OFFICE OF THE SUPERINTENDENT, CGST AND CENTRAL EXCISE, RANGE-I DIVISION - 2023 (6) TMI 940 - MADHYA PRADESH HIGH COURT, while allowing the claim, held that the taxpayer paid tax but his supplier inadvertently deposited the amount of GST in the wrong GSTIN. The Court further noted that it is a settled law that no one can’t be made to suffer for the fault of another.

Facts:

M/s Agrawal and Brothers (“the Petitioner”) has procured goods under e-auction from Railways dated August 12, 2017 at a total consideration of INR 51,97,142 including GST of INR 9,35,486 and had claimed ITC.

However, the Railway Department filed the GSTR-1, reflecting the supplies under the wrong GSTIN. It is an undisputed fact that the Railway department had deposited the tax.

Since the Petitioner had claimed the ITC, which was not reflected in GSTR-2A due to a mistake of the Railway Department.

The Revenue Department issued a demand notice compelling the Petitioner to repay the GST. Railway Department had mistakenly deposited the GST amount against an incorrect GSTIN, causing this discrepancy. The Petitioner filed various representations before the Railway Department but was not considered. In order to save the GST registration, the Petitioner deposited the amount of ITC along with interest.

Further, the Petitioner filed a writ before the High Court seeking refund of the amount paid under protest.

Issue:

Whether the taxpayer should pay taxes along with interest due to the supplier’s error in GST reporting?

Held:

The Hon’ble Madhya Pradesh High Court in AGRAWAL AND BROTHERS VERSUS UNION OF INDIA, OFFICE OF THE SUPERINTENDENT, CGST AND CENTRAL EXCISE, RANGE-I DIVISION - 2023 (6) TMI 940 - MADHYA PRADESH HIGH COURT held as under:

• Stated that, the taxpayer should not suffer due to a supplier’s error in GST reporting.
• Directed that, the Railway Department can seek a refund, as the Revenue Department has received the amount of tax contained in ITC twice.
• Held that, the Petitioner may seek refund from the Railway department.

(Author can be reached at [email protected])