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

Held

The Court held that the 'receipt' of goods under Section 16(2)(b) of the CGST Act does not mandate physical possession by the registered person. The Court reasoned that if a registered person provides documentary evidence, such as a memorandum of understanding or agreement with the supplier, and informs the end consumer about the transaction, and the supplier delivers the goods directly to the end consumer upon the registered person's instruction, it should be considered as compliance with the condition of receipt. The Court found that the cited decisions by the respondents were not relevant to the specific issue of interpreting Section 16(2)(b) in the context of direct delivery to end consumers. 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 considering the existence of any memorandum of understanding between the petitioner-dealer and the supplier, and further materials relating to the informing of the end consumer regarding the receipt of goods (delivery by the supplier directly or through a transporter). If these materials favored the petitioner, the grievance was to be redressed. The 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 multiple writ petitions before the Patna High Court. The core issue revolved around the denial of Input Tax Credit (ITC) by the revenue authorities. The petitioners argued that despite not physically receiving the goods themselves, they had arranged for the supplier to deliver the goods directly to the end consumer, based on agreements or memorandums of understanding. The revenue authorities, however, disallowed ITC, contending that the petitioners had not 'received' the goods as per Section 16(2)(b) of the CGST Act. The impugned orders were passed by various authorities including the Deputy Commissioner of State Tax and the Additional Commissioner of State Tax (Appeal).

Key Issues

1. Whether the petitioners are entitled to Input Tax Credit (ITC) under Section 16(2)(b) of the CGST Act, 2017, when goods are delivered by the supplier directly to the end consumer upon the instruction of the registered person, without physical receipt by the registered person. Petitioner's Contention: The petitioners argued that the 'receipt' of goods under Section 16(2)(b) of the CGST Act does not necessarily require physical possession by the registered person. They contended that if there is an agreement between the supplier and the registered person, and the supplier delivers the goods directly to the end consumer as per the registered person's instructions, it should be considered as 'receipt' for the purpose of claiming ITC. They asserted that they had provided sufficient material information, including agreements and intimations to end consumers, to the authorities to establish this arrangement. They also highlighted that the supplier had deposited the tax collected from them, which was not disputed by the revenue. Revenue's Contention: The revenue authorities, through their impugned orders, disallowed ITC on the basis that the petitioners had not physically received the goods, thereby failing to comply with the conditions stipulated in Section 16(2)(b) of the CGST Act. The judgment notes that the cited decisions on behalf of the respondents were not assisting the court as they did not relate to the interpretation of Section 16(2)(b) concerning physical receipt versus direct delivery to the end consumer.