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2024 (8) TMI 836 - HC - GST


Issues:
Challenge to the validity of Sections 16(2)(c) and 16(2)(d) of Assam Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017 along with show cause notices issued to petitioners.

Analysis:

1. The petitioners challenged the validity of certain sections of the tax acts and show cause notices issued to them. The counsel argued that the controversy is similar to a Delhi High Court case where it was held that purchasing dealers cannot be penalized for the selling dealer's failure to deposit tax collected.

2. The Delhi High Court had observed that demands against purchasing dealers in bona fide transactions cannot be sustained. The Supreme Court dismissed the Special Leave Appeal against this judgment, affirming the principle.

3. The Standing Counsel for CGST and counsel for the respondent State did not dispute that the issue in these petitions aligns with the Delhi High Court decision.

4. The provisions in question under Assam and Central GST Acts are akin to the challenged provision in the Delhi Value Added Tax Act, as highlighted in the Delhi High Court judgment.

5. The Delhi High Court emphasized that laws must not burden bona fide purchasing dealers disproportionately and should target defaulting selling dealers. It held that the provisions should not be applied to genuine transactions with registered dealers.

6. The Supreme Court upheld the Delhi High Court judgment and dismissed the Special Leave Petition, allowing the Department to proceed against non-bona fide cases.

7. The High Court, after reviewing the Delhi High Court judgment and Supreme Court decision, set aside the show cause notices in the present case, following the Delhi High Court's reasoning. The Department was allowed to act in cases of non-bona fide transactions.

8. The writ petitions were disposed of based on the alignment of the issues with the Delhi High Court decision, providing relief to petitioners with bona fide transactions while allowing action in other cases.

This detailed analysis outlines the legal arguments, court decisions, and implications of the judgment concerning the challenge to specific provisions of the tax acts and show cause notices.

 

 

 

 

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