Subhash Singh vs. Deputy Commissioner State Goods And Service Tax

Held

The Court modified the impugned order dated June 22, 2023, and the order dated March 7, 2024. The Court noted that the appellant had produced all invoices from his suppliers and that it was the duty of the suppliers to file their returns, which they had not done. Consequently, the Court directed that the appellant would deposit only 10% of the amount demanded by the respondents. The reasoning appears to be that while the appellant had fulfilled his obligations regarding purchase and payment, the suppliers' non-compliance should not lead to the full burden on the appellant, especially when he had provided documentary evidence of his transactions. The ratio decidendi is that a purchasing dealer who has valid invoices and has made payments through banking channels should not be penalized for the default of his suppliers in filing returns, and a partial deposit can be ordered as a compromise.

Facts

The appellant, Subhash Singh, is engaged in the retail and wholesale business of iron scrap and waste. He purchased goods with proper invoices and made payments through banking channels, including applicable GST, for the tax period April 2021 to March 2022. The appellant availed input tax credit (ITC) based on these transactions. The respondent, Deputy Commissioner, State Goods and Service Tax, initiated proceedings against the appellant. An intimation dated January 30, 2023, raised a demand of Rs. 79,41,598, which was reduced to Rs. 46,84,278 in a show cause notice dated March 17, 2023, and further reduced to Rs. 19,47,801 in an impugned order dated June 22, 2023. The appellant contended that if his suppliers defaulted in filing returns, he should not bear the consequences of denied ITC.

Key Issues

1. Whether proceedings under Section 74 of the Goods and Services Tax Act, 2017, can be initiated against the purchasing dealer (appellant) for availing ITC when the suppliers have not filed their returns, and if the appellant has purchased goods through proper invoices with payment via banking channels. Contentions: Petitioner/Appellant: Proceedings under Section 74 cannot be initiated against the appellant for availing ITC in a fraudulent manner, as he purchased goods with proper invoices and made payments through banking channels. If suppliers defaulted in filing returns, the purchasing dealer should not suffer the consequences of denied ITC. The appellant produced all invoices from suppliers, and it was the suppliers' duty to file returns. Revenue/State: The judgment does not record specific arguments from the respondent regarding the initiation of proceedings under Section 74 or the denial of ITC.