Vires of Section 16(2)(c) of CGST Act, 2017 challenged before Tripura HC, notices issued

Case details: Sahil Enterprises v. Union of India - [2021] 129 taxmann.com 233 (TRIPURA)

Judiciary and Counsel Details

• • Akil Kureshi, CJ. and S.G. Chattopadhyay, J.
  • Jagmohan Bansal, Sr. Adv. P.K. Ghosh and Mukul Singla, Advs. for the Petitioner.
  • Bidyut Majumder and Paramartha Datta, Adv. for the Respondent.

Facts of the Case

Section 16(2)(c) of Central Goods and Services Tax Act, 2017 provides that a registered dealer would be eligible for claiming input tax credit on the goods purchased on the condition that 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 such supply. In this case, the petitioner paid CGST on the purchases made from a registered dealer. But such dealer didn’t pay tax and it submitted that it has no control over the seller to ensure that such tax is deposited with the Government revenue as it is statutorily obligation of seller. Denying to the petitioner input tax credit on such purchases on which the petitioner has already paid tax on the ground that the selling dealer did not deposit the tax with the Government revenue would amount to double taxation.

High Court Held

The petitioner filed writ petition and challenged the vires of Section 16(2)(c) being violative of Articles 14, 19(1)(g) and 300A of the Constitution of India. The Honorable High Court noted that with respect to certain purchases made by the petitioner from another registered dealer after paying full taxes, the selling dealer has not deposited the tax with the Government. The department therefore, put petitioner’s input tax credit account under attachment. Since, this issue would require consideration and legislation framed by the Parliament is under challenge, notice is issued to the Attorney General.