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Petitioner |
D.Y. Beathel Enterprises |
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Respondent |
STO |
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Decision By |
Madras High Court |
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Date Of Order Or Judgement |
24-February-2021
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Citation No. |
W.P.(MD) Nos. 2127, 2117, 2121, and Ors. 2021 (2) GSTPanacea 11 HC Madras |
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Hon’ble Judge |
Justice G.R. Swaminathan |
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Decision |
Matter Remanded |
Impugned orders are quashed and the matter is remitted back to the revenue. Enquiry will have to be held afresh. Sellers shall be examined as witness. Parallelly, the revenue will also initiate recovery action against sellers.
Impugned Orders are Quashed & Matter Remanded-Facts of the Case
Impugned Orders are Quashed & Matter Remanded-The petitioner herein are dealers, registered with Nagercoil Assessment Circle. Though the petitions are 17 in number, the issue raised in all these writ petitions is virtually one and the same.
The petitioners are traders in Raw Rubber Sheets. According to them, they had purchased goods from one Charles and his wife Shanthi.
Based on the returns filed by the sellers, the petitioners herein availed input tax credit.
Later, during inspection by the respondent herein, it came to light that Charles and his wife, did not pay any tax to the Government.
This necessitated initiation of the proceedings and issuance of show cause notices to the Petitioner.
Argument Before Court
Impugned Orders are Quashed & Matter Remanded-Petitioner’s Contention
Impugned Orders are Quashed & Matter Remanded-The Petitioner submitted their replies specifically taking the stand that all the amounts payable by them had been already paid.
Therefore, the Sellers would be confronted during enquiry. But, subsequently without involving the sellers, the GST officials passed an order levying the entire liability on the Petitioners.
Being aggrieved, the Petitioner has filed this petition.
Impugned Orders are Quashed & Matter Remanded-Respondent’s Argument
Impugned Orders are Quashed & Matter Remanded-Advocate appearing for the respondent would point out that the petitioners had availed input tax credit on the premise that tax had already been remitted to the Government, by their sellers.
When it turned out that the sellers have not paid any tax and the petitioners could not furnish any proof for the same, the department was entirely justified in proceeding to recover the same from the petitioners herein.
The respondent cannot be faulted for having reversed whatever ITC that was already availed by the petitioners herein.
Calcutta High Court Held
Impugned Orders are Quashed & Matter Remanded-The Hon’ble Court On considering the provision of Section 16 of the CGST Act, 2017 it is noted that the assessee must have received the goods and the tax charged in respect of its supply, must have been actually paid to the Government either in cash or through utilization of ITC.
Therefore, if the tax had not reached to the Government, then the liability may have to be eventually borne by one party, either the seller or the buyer.
Observed that, the Respondent has not taken any recovery action against the Seller.
It must have been viewed very seriously and strict action ought to have been initiated against the Sellers before starting a recovery against the petitioner.
However, the Respondent did not ensure the presence of Sellers in the enquiry even when the Petitioners insisted on the same.
Therefore, the impugned orders are quashed and the matters are remitted back to the file of the respondent. Enquiry alone will have to be held afresh. Charles and his wife Shanthi will have to be examined as witnesses.
Parallely, the respondent will also initiate recovery action against Charles and his wife Shanthi.
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