The Punjab Authority for Advance Ruling ( AAR ) has held that the purchaser could not avail Input Tax Credit ( ITC ) when purchased from seller who discharged tax liability but preceding seller has not discharged tax liability.
The applicant Vimal Alloys Pvt Ltd is running a furnace at Mandi Gobindgarh and for the purpose of the same, they are procuring ferrous alloys, scrap, gas, and other materials from within the State of Punjab. The applicant has sought Advance Ruling as to,
Whether the purchaser is entitled to claim Input Tax Credit on the 3 purchases made by it from the seller who had discharged its tax liability but the preceding seller has not discharged its liability under the Act?
The assessee submitted that, the assessee could only ensure that its seller had filed the returns and reflected the transactions in question as the utility for the same had been provided at the GST Portal. He submitted that he had neither any obligation nor infrastructure to ascertain as to whether the seller had discharged its tax liability in accordance with law or not.
He further contended that It cannot also ascertain as to what product its seller was buying and selling or whether the preceding sellers of its seller had discharged their tax liabilities or not.
But the department on the other hand submitted that input tax credit could be availed only if the tax had actually been paid in cash or through admissible ITC.
The Authority of Viraj ShyamKarnTidke (CGST Member) and Varinder Kaur (SGST Member) held that the applicant could not avail Input Tax Credit (ITC) observing that,
“section 16(2)(c) CGST Act and PGST Act, it is very much clear that no registered person shall be entitled to take the credit of any input tax in respect of any supply of goods or services or both unless 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 the said supply. If the seller or preceding sellers have not deposited the tax either in cash or through utilization of input tax credit admissible in respect of the said supply, the purchaser is not eligible to claim ITC on such supply.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
