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TMI Blog2023 (3) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... Act? b. If answer to the above is in negative, then how the purchaser will ensure that the tax liability has been discharged by all the sellers falling in the queue of the transaction? c. Whether the purchaser would be eligible for the ITC since no infrastructure has been provided by the Govt, in order to ensure discharging of tax liability by the sellers falling in the queue of a transaction? d. Whether the purchaser is entitled to claim Input Tax Credit on the purchases made by it from the seller in the event of non-payment of tax by the seller even though the purchaser is in possession of the invoice, other relevant documents and the payments have been made through banking channels and there is no connivance or collusion between the purchaser and seller? At the outset, we would like to make it clear that the provisions of both the CGST Act and the PGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the PGST Act. 2. STATEMENT OF RELEVANT FACTS - AS PER THE APPLICANT The submissions, as reproduced verbatim, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him have been entered in the books of accounts of the seller. F. For the ready reference of this Hon'ble Court, the relevant provisions of the Central GST Act 2017 read with Punjab GST Act 2017 and the rules framed thereunder are reproduced here below:- 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. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, - (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. Explanation. For the purposes of this clause, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibutor, on the basis of any of the following documents, namely: - (a) an invoice issued by the supplier of goods or services or both in accordance with the provisions of section 31 (time limit for issue of tax invoice); (b) an invoice issued in accordance with the provisions of clause (f) of sub-section (3) of section 31 invoice issued by supplier itself for the supplies received from unregistered person on which supplier is liable to pay tax under reverse charge to comply with sub-section (3) & (4) of section 9 of CGST Act, 2017), subject to the payment of tax; (c) a debit note issued by a supplier in accordance with the provisions of section 34: (d) a bill of entry or any similar document prescribed under the Customs Act, 1962 or rules made thereunder for the assessment of integrated tax on imports: (e) an Input Service Distributor invoice or Input Service Distributor credit note or any document issued by an Input Service Distributor in accordance with the provisions of sub-rule (1) of rule 54. (2) Input tax credit shall be availed by a registered person only if all the applicable particulars as specified in the provisions of Chapter VI are contained in the said docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of tax by the seller unless and until there is collusion and connivance between seller and the purchaser. The Hon'ble Punjab and Haryana High Court in the case if Gherulal Balchand vs State of Haryana reported as 45 VST 190 held as under:- "In legal jurisprudence, the liability can be fastened on a person who either acts fraudulently or has been a party to the collusion or connivance with the offender. However, law nowhere envisages imposing any penalty either directly or vicariously where a person is not connected with any such event or an act. Law cannot envisage an almost impossible eventuality. The onus upon the assessee gets discharged on production of Form VAT C-4 which is required to be genuine and not thereafter to substantiate its truthfulness by running from pillar to post to collect the material for its authenticity. In the absence of any malafide Intention, connivance or wrongful association of the assessee with the selling dealer or any dealer earlier thereto, no liability can be imposed on the principle of vicarious liability. Law cannot put such onerous responsibility on the assessee otherwise, it would be difficult to hold the law to be valid on the touch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the tax collected by them and not punish bona fide purchasing dealers. The latter cannot be expected to do the impossible. It is trite that a law that is not capable of honest compliance will fall in achieving its objective. If it seeks to visit disobedience with disproportionate consequences to a bona fide purchasing dealer, it will become vulnerable to invalidation on the touchstone of Article 14 of the Constitution. The relevant excerpts of the judgment are as under: "..The Court respectfully concurs with the above analysis and holds that in the present case, the purchasing dealer is being asked to do the impossible, i.e. to anticipate the selling dealer who will not deposit with the Government the tax collected by him from those purchasing dealer and therefore avoid transacting with such selling dealers. Alternatively, what Section 9 (2) (9) of the DVAT Act requires the purchasing dealer to do is that after transacting with the selling dealer, somehow ensure that the selling dealer does in fact deposit the tax collected from the purchasing dealer and if the selling dealer fails to do so, undergo the risk of being denied the ITC. Indeed Section 9 (2) (g) of the DVAT Act pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o mismatch of the transactions in Annexures 2A and 28. Unless the expression "dealer or class of dealers" in Section 9 (2) (g) is read down" in the above manner, the entire provision would have to be held to be violative of Article 14 of the Constitution. The result of such reading down would be that the Department is precluded from Invoking Section 9 (2) (g) of the DVAT to deny ITC to a purchasing dealer who has bona fide entered into a purchase transaction with a registered selling dealer who has issued a tax invoice reflecting the TIN number. In the event that the selling dealer has failed to deposit the tax collected by him from the purchasing dealer, the remedy for the Department would be to proceed against the defaulting selling dealer to recover such tax and not deny the purchasing dealer the ITC. Where, however, the Department is able to come across material to show that the purchasing dealer and the selling dealer acted in collusion then the Department can proceed under Section 40A of the DVAT Act. Resultantly, the default assessment orders of tax, Interest and penalty issued under Sections 32 and 33 of the DVAT Act, and the orders of the OHA and Appellate Tribunal Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Advance Ruling. D. The availability of Input Tax Credit on the purchases is subject to provisions of section 16 of the Punjab GST Act, 2017. Wherein, u/s 16(2)(c) of the Act ibid no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply. 4. HEARING Personal hearing in the matter was held on 11.02.2022 but no one appeared on behalf of the applicant. However, on next date of hearing on 18.02.2022, Sh. Rishab Singla, counsel for the applicant appeared and submitted the written submissions. The submission were given from Point no. 5 to Point no. 13. It is pertinent to mention here that the submission given from Point no. 5 to Point no. 9 are the same which are given in Para "2A. STATEMENT CONTAINING APPLICANTS INTERPRETATION" above and therefore the same are not being repeated herein. The submissions made vide Point 10 to 13 are as under:- "10. Recently, the Hon'ble Madras High Court as well as Hon'ble Calcutt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame into the Treasury or is engaged in passing of ingenuine Input Tax Credit. It is submitted that in case the Department catch hold of the said assessee and raises demand against him under Section 74 and the said dealer pays the same also, then also the assessee is not entitled to Input Tax Credit as the same is barred under Section 17. Along with above submissions the applicant has also submitted the copies of Sections & rules of the CGST Act, 2017 and various judgements, which are as follows:- (1) Copy of Section 16 of the CGST Act, 2017. (2) Copy of Section 37 of the CGST Act, 2017 (3) Copy of Section 38 of the CGST Act, 2017. (4) Copy of Section 39 of the CGST Act, 2017. (5) Copy of Rule 59 of the CGST Rules, 2017. (6) Copy of Rule 60 of the CGST Rules, 2017. (7) Copy of Rule 61 of the CGST Rules, 2017. (8) Copy of Judgement by Hon'ble Punjab & Haryana High Court in the case of Gheru Lal Bal Chand v. State of Haryana and Another. (9) Copy of Judgement by Hon'ble Delhi High Court in the case of Shanti Kiran Singh Private Limited v. Commissioner Trade and Tax Department. (10) Copy of Judgement by Hon'ble Delhi High Court in the case of On Quest M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also gone through the questions raised by the applicant on which advance ruling is sought, the applicant's interpretation of law and the detailed comments submitted by the Assistant Commissioner State Tax, Fatehgarh Sahib. At the outset, we would like to state that the provisions of both the CGST Act and the PGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the PGST Act. B. The applicant is running a furnace at Mandi Gobindgarh and for the purpose of the same, they are procuring ferrous alloys, scrap, gas, and other materials from within the State of Punjab. The applicant requested for the Advance Ruling as per questions stated in Para 14 of application as under:- i) Whether the purchaser is entitled to claim Input Tax Credit on the 3 purchases made by it from the seller who had discharged its tax liability but the preceding seller has not discharged its liability under the Act? ii) If answer to the above is in negative, then how the purchaser will ensure that the tax liability has been discharged by all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth 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. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37; (b) he has received the goods or services or both Explanation.- For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services- (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019. From the perusal of above-mentioned provisions of the section 16(2)(c) CGST Act and PGST Act, it is very much clear that no registered person shall be entitled to take the credit of any input tax in respect of any supply of goods or services or both unless the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply. If the seller or preceding sellers have not deposited the tax either in cash or through utilization of input tax credit admissible in respect of the said supply, purchaser is not eligible to claim ITC on such supply. E). Therefore, keeping in view the relevant provisions of Section 16(2)(c) of CGST Act read with PGST Act, we have no dou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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