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TMI Blog2023 (8) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... n paid is a benefit or concession conferred under the statute - the contention of double taxation does not impress us especially since the claim is denied only when the supplier who collected tax from the purchaser fails to pay it to the Government. Taxation as has been held is a compulsory extraction made for the purpose of public good, by the welfare State and without the levy being paid to the Government; there can be no claim raised of the liability to tax having been satisfied and hence there is no question of double taxation. The seller and purchaser have an independent contract without the junction of the Government. The statute provides for a levy of tax on goods and services or both, supplied by one to the other which can be collected but the dealer who collects it has also the obligation to pay it up to the State. It is clear that the literal nomenclature and the statutory language, mandates that there should be credit available in the credit ledger of the purchaser to claim Input Tax and otherwise the claim would be frustrated. On the above reasoning, it is found that the claim of Input Tax Credit raised by the petitioner cannot be sustained when the supplying/sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer through bank account and the movement of the goods purchased. Obviously, the selling dealer has not paid up the tax liability, to the State, which stood satisfied by the purchasing dealer and collected by the selling dealer. The underlying object of Input Tax Credit regime brought in, is to avoid the cascading effect of tax and this would be totally frustrated if the department officials attempt recovery of tax from the purchasing dealer, which tax liability has already been satisfied by payment of the tax component, to the selling dealer. The recovery now sought has the character of a double taxation and it should be the department who proceeds against the selling dealer to recover the collected amount of tax; which if not paid after collection, entails penalties under the tax enactment. Learned counsel for the petitioner also relied on two decisions of learned Single Judges of the Madras High Court. Sri Vinayaga Agencies v. The Assistant Commissioner (CT) Anr. in WP Nos. 2036 to 2038 of 2013 dated 29.01.2013 and WP (MD) No. 2127 of 2021 and connected cases; M/s D.Y. Beathel Enterprises v. The State Tax Officer (Data Cell) dated 24.02.2021. It is argued that the reasonin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or recovery of tax in the manner known to law and the revisional orders reversing the Input Tax Credit under sub-section (16) of Section 19 was totally incorrect, erroneous and contrary to the provisions of the Tamil Nadu Value Added Tax Act and Rules. 6. M/s D.Y. Beathel Enterprises specifically noticed the afore-cited decision and found that it was under the VAT Act. Section 16 (1) (2) of the GST Act was quoted and it was held that when the seller has collected tax from the purchasing dealer, the omission on the part of the seller to remit the tax in question should be viewed very seriously and strict action ought to have been initiated against the seller. The impugned orders were quashed on the ground that the selling dealer was not examined and on the ground that there was no recovery initiated against the selling dealer. We have to notice immediately that the second cited decision ignored the provision under sub-clause (c) of Section 16 (2) of the GST Act. 7. Section 16(1) and (2) (a),(b),(c) (d) are extracted hereinunder:- 16. Eligibility and conditions for taking input tax credit. (1) Every registered person shall, subject to such conditions and restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the very nomenclature contemplates a credit being available for the purchasing dealer in its credit ledger by way of payment of tax by the supplier to the Government. 9. In this context, we refer to a decision of the Hon ble Supreme Court in The State of Karnataka v. M/s Ecom Gill Coffee Trading Private Limited; Civil Appeal No. 230 of 2023 which was disposed of along with a batch of appeals. The first batch of appeals were in which the purchasing dealer claimed Input Tax Credit solely on the ground that the sale price, which included tax, was paid to the seller by an account payee cheque and that copies of invoices were provided. In one of the cases, relating to one M/s Tallam Apparels, the purchase of readymade garments was from dealers who had their registration cancelled and those who filed NIL returns. In the case of M/s Ecom Gill Coffee Trading Private Limited, the Assessing Officer having entertained doubts about the Input Tax Rebate Claim; sought production of accounts, books, tax invoices etc. Out of the 27 sellers, six were found to be de-registered, three having not paid up the taxes, the remaining six denied the turnover and failed to pay taxes. Similar contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nferred by the statute and if the conditions prescribed in the statute are not complied; no benefit flows to the claimant. 12. The contention of double taxation does not impress us especially since the claim is denied only when the supplier who collected tax from the purchaser fails to pay it to the Government. Taxation as has been held is a compulsory extraction made for the purpose of public good, by the welfare State and without the levy being paid to the Government; there can be no claim raised of the liability to tax having been satisfied and hence there is no question of double taxation. 13. The further contention raised by the assessee is also one of the statute having provided measures to recover the collected tax, which the selling dealer fails to pay to the Government. The mere fact that there is a mode of recovery provided under the statute would not absolve the liability of the tax payer to satisfy the entire liability to the Government. The purchasing dealer being the person who claims Input Tax Credit could only claim the Input Tax benefit if the supplier who collected the tax from the purchaser has paid it to the Government and not otherwise. The Government def ..... X X X X Extracts X X X X X X X X Extracts X X X X
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