M/S Bathla Telectech PVT. LTD. vs. The State Of Bihar

Held

The Court held that physical receipt of goods by the dealer is not always necessary to claim Input Tax Credit (ITC). It clarified that under Section 16(2)(b) of the CGST Act, if goods are delivered to any other person upon the direction of the registered person, the registered person shall be deemed to have 'received' such goods. The Court emphasized that the crucial aspect is whether the goods are used or intended to be used for the purpose of and in furtherance of business, subject to other conditions of Sections 16 and 17 of the CGST Act. The Court found that the impugned orders were not justified as the authorities had not properly examined the material information regarding the agreement between the petitioner and the supplier, and the intimation to the end consumer regarding the delivery. The Court set aside the impugned orders and remanded the matter to the Deputy Commissioner of State Tax to re-examine the compliance with Section 16(2)(b) by verifying the existence of a Memorandum of Understanding between the petitioner and the supplier, and any documentation indicating 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 and M/s Bathla Teletech Pvt. Ltd., along with others, filed writ petitions challenging orders passed by GST authorities. The core issue revolved around the eligibility for Input Tax Credit (ITC) concerning goods that were purchased by the petitioner from a supplier but delivered directly to an end consumer, as per the petitioner's instructions. The petitioners contended that they had fulfilled the conditions for ITC, including the deemed receipt of goods, by providing documentation such as Memoranda of Understanding and intimations to end consumers. The revenue authorities had disallowed ITC, citing non-physical receipt of goods by the petitioner. 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 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 instruction, 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 physical receipt of goods is not mandatory for claiming ITC. They contended that if there is an agreement between the supplier and the petitioner, and the goods are delivered to the end consumer on the petitioner's instruction, it should be considered as 'receipt' under Section 16(2)(b). They relied on the principle that the goods are used or intended to be used in the course or furtherance of business. They also argued that the supplier had deposited the tax collected from the petitioner, which was not disputed by the revenue. Revenue's arguments: The revenue authorities disallowed ITC, implying that physical receipt of goods by the petitioner was a prerequisite, and the direct delivery to the end consumer did not satisfy this condition. The judgment notes that the cited decisions on behalf of the respondents were not assisting in interpreting Section 16(2)(b) regarding physical receipt of goods.