Tirupati Balaji Traders Vs Union of India
Date: July 23, 2024
Subject Matter
ITC is a conditional benefit governed by specific statutory requirements
Summary
In the case of Tirupati Balaji Traders v. Union of India, heard by the Kerala High Court on July 24, 2024, the court dismissed a petition by Tirupati Balaji Traders, which claimed that denying Input Tax Credit (ITC) to a purchasing dealer who has paid tax to the supplier, yet where the supplier did not remit tax to the government, would undermine GST provisions and the Insolvency and Bankruptcy Code. - The Court reaffirmed that ITC is a conditional benefit governed by specific statutory requirements, including that the supplier must have paid the corresponding tax to the government. It referred to earlier judgments, particularly M. Trade Links v. Union of India, upholding the validity of the legislation and the stipulations within Section 16 of the CGST Act. - The Court emphasized the importance of compliance with specified conditions for claim eligibility and also pointed out an ongoing Supreme Court challenge concerning Section 16(4) of the CGST Act. In conclusion, the petition was dismissed, solidifying the notion that only if the supplier fulfills its tax obligations, can the purchasing dealer claim ITC under GST law.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The issues raised in this writ petition are substantially covered against the petitioner by a judgment of a learned Single Judge of this Court in M. Trade Links v. Union of India [2024 KLT OnLine 1624]. I am in respectful agreement with the view taken by this Court in M. Trade Links (Supra).
2. Though the learned counsel appearing for the petitioner has extensively argued that if an interpretation is placed on the provisions of Section 16(2)(c) of the Central Goods and Services Tax/State Goods and Services Tax Act, 2017 (CGST/SGST Act) that would deny input tax credit to a purchasing dealer who has paid the entire amount of tax to the supplying dealer, the same would render otiose the provisions of Sections 75(12), 76, 79, 82, 83 and 88 of the CGST/SGST Act and in the facts and circumstances of this case the Insolvency and Bankruptcy Code, 2016, I find that since the right to avail input tax credit is a conditional right, the petitioner cannot be given the benefit of input tax credit unless the amount of tax collected from the petitioner has actually been paid to the exchequer. I am fortified in taking the above view in the light of the observations of a Division Bench of this Court in Nahasshukoor v. Assistant Commissioner and Others; 2023 SCC OnLine Ker 11369, where this Court held as follows:
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As stated already, the input tax credit is in the nature of a benefit or concession conferred under the statute. The impugned provisions prescribe certain conditions for the purchasing dealers to avail of the benefit. It is up to the purchasing dealer to avail of the said benefit/concession following those conditions.
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In the light of the above, the writ petition fails and it is accordingly dismissed.