Prime Metals Vs Central Board of Indirect Taxes And Customs & Ors. (Supreme Court of India)
The Supreme Court, in a Special Leave Petition arising from a Rajasthan High Court order, took up the issue concerning the constitutional validity of Section 16(2)(c) of the CGST Act in a dispute involving denial of Input Tax Credit (ITC). The petitioner had challenged the Rajasthan High Court’s decision directing it to pursue the statutory appellate remedy under Section 107 of the CGST Act instead of adjudicating its challenge to Section 16(2)(c). The petitioner argued that a literal interpretation of Section 16(2)(c) requires a recipient to perform an impossible act, as entitlement to ITC depends on tax being paid to the Government by the supplier, a matter beyond the recipient’s control. It was further submitted that the immediate supplier had already paid the tax and that the allegation related only to a supplier further up the chain. The Supreme Court recorded these submissions, noted the challenge to the validity of Section 16(2)(c), directed copies of the petition to be furnished to the Union of India and the State of Rajasthan, and listed the matter for further hearing on 29 May 2026.
Facts:
M/s Prime Metals (“the Petitioner”) is a registered person under the CGST Act / Rajasthan Goods and Services Tax Act, 2017 (“the RGST Act”), engaged through its unit at Matsya Industrial Area, Alwar, Rajasthan. The Petitioner availed ITC on inward supplies received from its suppliers.
