M/S Shreyash Retail Private Limited vs. The State Of Bihar

Held

The Court held that physical receipt of goods by the dealer is not always mandatory for claiming ITC under Section 16(2)(b) of the CGST Act, 2017. The Court reasoned that if a registered person instructs a supplier to deliver goods directly to an end consumer, and there is an agreement or MOU among the supplier, dealer, and end consumer, and the end consumer is informed, then the registered person can be deemed to have 'received' the goods. The Court found that the cited decisions by the respondents were not relevant to the interpretation of Section 16(2)(b) concerning the mode of receipt of goods. The Court noted that in the present cases, the supplier had deposited the tax collected from the petitioner, which was not disputed. Consequently, the impugned orders were set aside. The matters were remanded to the Deputy Commissioner of State Tax to re-examine the compliance with Section 16(2)(b) by considering the existence of an MOU and other materials related to the delivery of goods to the end consumer. If these materials favored the petitioner, their grievance was to be redressed.

Facts

The petitioners, M/s Sane Retails Private Limited, M/s Bathla Teletech Pvt. Ltd., and M/s Utkrisht Trade Solutions Pvt. Ltd., filed writ petitions before the Patna High Court challenging orders passed by GST authorities. The core issue revolved around the denial of Input Tax Credit (ITC) to the petitioners. The petitioners contended that they had arranged for suppliers to deliver goods directly to their end consumers, and that they had provided sufficient documentation to the authorities to demonstrate this arrangement. The authorities, however, had disallowed ITC, seemingly on the basis that the petitioners had not physically received the goods. The impugned orders were passed by the Deputy Commissioner of State Tax and the Additional Commissioner of State Tax (Appeal).

Key Issues

1. Whether the physical receipt of goods by a registered person is mandatory for claiming Input Tax Credit (ITC) under Section 16(2)(b) of the CGST Act, 2017, when goods are delivered directly to the end consumer upon the instruction of the registered person? Petitioner's arguments: The petitioners argued that physical receipt of goods by the dealer is not essential if there is an agreement or Memorandum of Understanding (MOU) among the supplier, dealer, and end consumer, and if the end consumer is informed about the transaction. They asserted that they had provided all necessary material information to the authorities to prove they had 'received' the goods in terms of the law, even if delivery was to the end consumer. They relied on the interpretation of Section 16(2)(b) of the CGST Act. They also pointed out that the supplier had deposited the tax collected from them, which was not disputed by the revenue. Revenue's arguments: The judgment does not explicitly record arguments made by the revenue or State respondents regarding the interpretation of Section 16(2)(b) or the specific facts of the cases. However, their actions in passing the impugned orders suggest they maintained that physical receipt by the petitioner was a prerequisite for ITC.