M/S Shreyash Retail 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. If the dealer can demonstrate to the competent authority that there is an agreement or memorandum of understanding among the supplier, the dealer, and intimation to the end consumer regarding the transaction and delivery, it could be considered as 'receipt' of 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 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) of the CGST Act. The re-examination should focus on the existence of a memorandum of understanding between the petitioner and the supplier, and materials indicating the informing of the end consumer about the receipt of goods (delivery by the supplier directly or through a transporter). If these materials favor the petitioner, the grievance is to be redressed accordingly. The exercise is 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 revolved around the eligibility for Input Tax Credit (ITC) concerning goods that were purchased by the petitioner from a supplier and then, at the petitioner's direction, delivered directly to an end consumer. The petitioners contended that they had provided sufficient material to the authorities to demonstrate that they had indeed 'received' the goods for the purpose of Section 16(2)(b) of the CGST Act, even though physical possession was not taken by them. The authorities had denied ITC, leading to the present litigation. The impugned orders were dated 14.01.2023 and 07.10.2023 in one of the cases.

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 by the petitioner from a supplier are delivered directly to an end consumer at the petitioner's direction, and whether such a transaction constitutes 'receipt' of goods by the petitioner for the purpose of Section 16(2)(b) of the CGST Act? Petitioner's Contention: The petitioner argued that physical receipt of goods is not mandatory for claiming ITC. They contended that if they have an agreement with the supplier and inform the end consumer about the transaction, and the supplier delivers the goods directly to the end consumer as per the petitioner's instructions, it should be deemed as 'receipt' of goods by the petitioner. They relied on the interpretation of Section 16(2)(b) of the CGST Act. They also stated that the supplier had deposited the tax collected from the petitioner, which was not disputed by the State. Revenue's Contention: The judgment does not explicitly record arguments made by the revenue or state respondents. However, their actions in passing orders denying ITC indicate a contention that the conditions for claiming ITC, specifically the 'receipt' of goods, were not met.