M/S Sane Retails Private Limited vs. The State Of Bihar

Held

The Court held that the receipt of goods by a dealer from a supplier does not necessarily require physical receipt. The Court found that if the dealer can demonstrate to the competent authority that an agreement or memorandum of understanding exists among the supplier, dealer, and end consumer, and that the end consumer has been intimated regarding the transaction, then the dealer can be deemed to have 'received' the goods for the purpose of Section 16(2)(b) of the CGST Act. The Court noted that the cited decisions by the respondents were not relevant to the interpretation of Section 16(2)(b) concerning physical receipt versus deemed receipt. The Court also observed that the supplier had deposited the tax collected from the petitioner, which was not disputed. Consequently, the impugned orders were set aside. The matter was remanded to the Deputy Commissioner of State Tax to re-examine the compliance with Section 16(2)(b) by verifying the existence of an MoU between the petitioner and the supplier, and materials showing the delivery of goods to the end consumer. If these materials favored the petitioner, their grievance was to be redressed within six months.

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 eligibility for Input Tax Credit (ITC) where goods were purchased by the petitioner from a supplier and, at the petitioner's direction, delivered directly to an end consumer. The petitioners contended that they had fulfilled the conditions for ITC, including the deemed receipt of goods under Section 16(2)(b) of the CGST Act, as they had instructed the supplier to deliver to the end consumer. The revenue authorities had denied ITC, likely on the grounds of non-physical receipt of goods by the petitioner. The impugned orders were dated 14.01.2023 and 07.10.2023, among others.

Key Issues

1. Whether the petitioner is entitled to Input Tax Credit (ITC) under Section 16(1) of the CGST Act, 2017, when goods purchased from a supplier are delivered directly to an end consumer at the petitioner's direction, and if such a transaction constitutes 'receipt' of goods by the petitioner for the purpose of Section 16(2)(b) of the CGST Act, 2017. Petitioner's arguments: The petitioner argued that under Section 16(2)(b) of the CGST Act, receipt of goods can be deemed even if not physically received by the dealer, provided there is an agreement among the supplier, dealer, and end consumer, and the end consumer is informed about the transaction. They claimed to have provided sufficient material to the authorities to demonstrate this. They also contended that the supplier had deposited the tax collected from the petitioner, which was not disputed by the State. Revenue's arguments: The judgment notes that the cited decisions on behalf of the respondents were not assisting. It specifically mentions that in the case of Aastha Enterprises, the supplier had not deposited the tax collected, which was a mandatory condition. However, in the present case, the judgment states this was not disputed.