M/S Consulting Rooms Private Limited vs. The State Of Bihar

Held

The Court held that the physical receipt of goods by the dealer from the supplier is not necessarily the only mode of receipt for the purpose of Section 16(2)(b) of the CGST Act. The Court found that if there is an agreement or memorandum of understanding among the supplier, the dealer (petitioner), and intimation to the end consumer regarding the transaction and delivery, the registered person can be deemed to have 'received' the goods. The Court noted that the petitioners had submitted materials to demonstrate that they had instructed the supplier to deliver the purchased goods to the end consumer. The Court found the cited decisions on behalf of the respondents not assisting as they did not relate to the interpretation of Section 16(2)(b) concerning physical receipt versus deemed receipt in cases of direct delivery to end consumers. The Court set aside the impugned orders and remanded the matter to the Deputy Commissioner of State Tax for a fresh examination of the available materials, specifically focusing on the existence of a memorandum of understanding between the petitioner and the supplier, and documentary proof of delivery to the end consumer. The Court directed that if these materials favor the petitioner, their grievance should be redressed accordingly. The entire exercise was to be completed 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 challenging orders passed by GST authorities. The core issue revolves around the denial of Input Tax Credit (ITC) due to the revenue's contention that the petitioners had not physically received the goods, even though the goods were delivered by the supplier directly to the end consumer at the petitioner's instruction. The petitioners argued that such direct delivery to the end consumer, based on their agreement with the supplier, should be considered as 'receipt' for the purpose of claiming ITC. The impugned orders were passed by the Deputy Commissioner of State Tax and confirmed by the Additional Commissioner of State Tax (Appeal).

Key Issues

1. Whether the physical receipt of goods by the registered person is mandatory for claiming Input Tax Credit (ITC) under Section 16(2)(b) of the CGST Act, when goods are delivered by the supplier directly to the end consumer at the registered person's direction? Petitioner's Arguments: The petitioners contended that the language of Section 16(2)(b) of the CGST Act, when read with the deeming fiction provided, implies that goods are deemed to have been received by the registered person if they are delivered to any other person upon the registered person's direction. They argued that the authorities failed to consider this deeming provision and wrongly insisted on physical receipt. They also submitted that they had provided sufficient documentary evidence, including agreements and intimations to end consumers, to establish the transaction. They relied on the principle that goods used or intended to be used in furtherance of business entitle them to ITC. Revenue's Arguments: The revenue, through the State of Bihar and the Union of India, argued that physical receipt of goods is a prerequisite for claiming ITC. They relied on decisions that, according to the judgment, were not directly on the interpretation of Section 16(2)(b) concerning direct delivery to end consumers. The judgment notes that the revenue did not dispute that the supplier had deposited the tax collected from the petitioner.