Recent Judgments on GST: A Concise Overview

Introduction: The Supreme Court of India plays a pivotal role in shaping the landscape of Goods and Services Tax (GST) through its judgments and interpretations. These rulings have significant implications for GST administration, field formations, taxpayers, and professionals. In this article, we provide a concise overview of some recent Supreme Court judgments, offering valuable insights for those navigating the complexities of GST.

 

SC Quashes GST Department’s Plea Against High Court

In Assistant Commissioner of CGST v. D.Y. Beathel Enterprises, the Supreme Court dismissed the department’s Special Leave Petition against a High Court ruling granting relief on Input Tax Credit (ITC). Such dismissal indicates that no legal infirmity was found in the High Court’s reasoning, though it does not constitute a declaration of law under Article 141 of the Constitution.

 

Delhi High Court: Eligibility of ITC Despite Retrospective Cancellation of Supplier’s GST Registration

In Quest Merchandising India Pvt. Ltd. v. Govt. of NCT of Delhi, the Delhi High Court held that a bona fide recipient cannot be denied ITC solely on account of retrospective cancellation of the supplier’s GST registration, provided the recipient has complied with the conditions prescribed under Section 16(2) of the CGST Act.

 

Calcutta High Court: ITC is a Vested Right

In the case of Suncraft Energy Pvt. Ltd. v. Assistant Commissioner, State Tax, the Hon’ble Calcutta High Court held that ITC is a vested right and cannot be arbitrarily denied by the authorities without following due procedure. This ruling affirmed one of the core principles of law that once ITC is accrued, it cannot be terminated in any manner without adherence to the right procedures.

 

Calcutta High Court Judgement on GST Return Mismatch Cases

In the case of Suncraft Energy Pvt. Ltd. v. ACST, the High Court provided several instances where the discrepancies between GSTR-2A and GSTR-3B caused ITC rejection. The court noted that ITC should not be denied solely due to such discrepancies if the taxpayer acted in good faith and there was no fraud or misrepresentation.

 

Judicial Interpretation of Time Limits Under Section 16(4) of the CGST Act

In Union of India v. Bharti Airtel Ltd., the Supreme Court emphasized that the time limit prescribed under Section 16(4) of the CGST Act for availing ITC is mandatory in nature and must be strictly complied with, subject to the specific facts of each case.

 

Judicial Recognition of ITC Protection for Bona Fide Recipients (Ms. Vidya Drolia vs. The Union of India)

This particular case was based on the theory of ‘vested right’ in ITC. The appellant, M/s Vidya Drolia, is eligible for an input tax credit in respect of GST paid on purchases from a registered dealer under the CGST Act. However, the supplier’s GST registration was later cancelled. The tax authorities refused the ITC based on the cancelled registration.

 

The Supreme Court entertained the concern of the taxpayer and affirmed the existence of a ‘vested right’ to ITC. The court also found that the credit for GST paid on purchases cannot be denied to a bona fide recipient due to the supplier’s cancellation of registration. This judgment provides commercial entities with the necessary protection against being held liable for situations beyond their control.

 

Denial of ITC when the supplier has not paid the GST: Bona Fide Recipients

In Arise India Ltd. v. Commissioner of Trade & Taxes, courts have consistently held that Input Tax Credit validly availed by a bona fide recipient cannot be denied for procedural lapses or defaults attributable solely to the supplier, where the recipient has acted in good faith and complied with statutory requirements.

 

Responsibility of Proving ITC Eligibility Lies on the Claimant

In State of Karnataka v. Ecom Gill Coffee Trading Pvt. Ltd., the Supreme Court of India reiterated the legal position that the burden of proof for establishing the admissibility of an ITC claim lies with the business claiming it.

 

This judgment affirms the duties of businesses to keep proper books of accounts and to ensure that their procurements are proper and related to their business operations. To support their ITC claims, businesses should have adequate documentation such as tax invoices, delivery challans, and receipt evidence.

 

These recent Supreme Court judgments provide valuable guidance and insights into various aspects of GST law and administration. By staying informed about these rulings, taxpayers and professionals can navigate the GST landscape more effectively, ensuring compliance and legal certainty.

 

For any queries

Feel free to write to [info@taxreturnwala.com]