Metal Syndicate And Other Vs Union of India And Others (Gauhati High Court)
Gauhati High Court Quashes GST Demand Because Bona Fide Purchaser Cannot Be Penalised for Supplier’s Tax Default; Denial of ITC for Supplier’s Non-Payment of Tax Held Unsustainable in Absence of Collusion
The Gauhati High Court allowed the writ petition and set aside the orders confirming GST demand, interest, and penalty against the petitioners, holding that the issue was squarely covered by the earlier Division Bench decision in National Plasto Moulding v. State of Assam.
The petition challenged the Order-in-Original dated 19.02.2024 and the Order-in-Appeal dated 14.02.2025, whereby a tax demand of ₹78,70,952/- comprising IGST of ₹47,12,010/-, CGST of ₹15,52,967/-, and SGST of ₹16,05,975/- for the period July 2017 to March 2019 had been confirmed. Interest under Section 50 of the CGST Act and corresponding provisions of the SGST and IGST Acts was also directed to be recovered, and an equivalent penalty of ₹78,70,952/- was imposed under Section 74(1) read with Section 122 of the CGST Act and Section 20 of the IGST Act.
The petitioners contended that they had purchased goods from suppliers through proper invoices and had made payments, including GST, through banking channels. Following allegations of wrongful availment of input tax credit (ITC), the petitioners appeared before the authorities and furnished all relevant documents. A subsequent search conducted at their business premises resulted in no incriminating material being recovered. The petitioners maintained that goods had actually been received, payments had been duly made, and ITC had been availed in accordance with Section 16(2) of the CGST Act.
