Important ruling under GST on taxation

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- Sales Tax - Soham Mashruwala

There is a very strict provision under the GST Act regarding taxation. Generally, when the customer or recipient pays the GST shown in the bill to the supplier, he assumes that the supplier will pay the tax and that the entire responsibility rests with the supplier. But there is a provision in the GST law that if the supplier does not pay the tax, the receiver is ordered to suffer and not give his tax credit. Regarding the supplier without any investigation, in which case action is taken directly on the recipient. By Calcutta High Court Suncraft Energy Pvt. Vs. A very noble judgment given in Assistant State Tax Commissioner (MAT 1218 of 2023). Naturally, the judgment came in favor of the businessman, so the Khatu appealed to the Supreme Court and the Supreme Court rejected the plea of ​​the Khatu and upheld the judgment of the Calcutta High Court. This matter is discussed in today's article.

The facts of the case

The petitioner company noticed a difference in the tax credit shown in GSTR2A and GSTR3B for the financial year 2017-18 by the accounts. A notice was then issued to recover the amount of tax credit which was under-represented in GSTR2A. The petitioner filed an elaborate reply to the show-cause notice and, rejecting that reply, ordered tax, interest and penalty under section 73 by the account. A writ was filed in the Calcutta High Court against this order.

Presentation of the applicant

It is submitted by the petitioner that in the present case all the provisions of Section 16 have been complied with by him and he has received tax invoices, supply of goods and services to prove the claim of tax. On 18.10.18 it was clarified that GSTR2A has given a facility and the tax credit cannot be determined on that basis alone. No action or investigation has been done on the selling supplier.

Judgment of the Calcutta High Court

It was observed by the High Court that in the present case the petitioner can prove his facts. No action or recovery has been made by the seller against the supplier through the account. Further, there is no evidence that the petitioner has colluded with the supplier to evade GST. Thus, the tax cannot be recovered from the petitioner without taking any action against the seller.

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