Advance Engineering Farms And Equipments Vs State of Assam And 3 Ors (Gauhati High Court)
The Gauhati High Court heard a writ petition filed by a proprietorship firm registered under the Central Goods and Services Tax Act, 2017 challenging the rectification order dated 10.04.2024, whereby the respondent authorities demanded CGST of Rs.1,60,506/- and SGST of Rs.1,60,506/- for the Financial Year 2017-18 on the ground of excess Input Tax Credit (ITC). The petitioner had purchased generators from Respondent No.4 for Rs.9,44,000/-, paying CGST and Assam GST of Rs.72,000/- each along with the purchase price. A show cause notice dated 30.09.2023 was issued alleging excess ITC. Although the petitioner replied explaining its ITC claim and later sought rectification, the authorities retained the disallowance relating to ITC on purchases from Respondent No.4.
The Court observed that the issue was covered by the Division Bench judgment in National Plasto Moulding Vs. State of Assam and 3 Others, which had accepted the proposition laid down by the Delhi High Court in On Quest Merchandising India Private Limited Vs. Government of NCT of Delhi and Others. The Delhi High Court had held that a purchasing dealer who had bona fide entered into transactions with a registered selling dealer issuing valid tax invoices should not be denied ITC merely because the selling dealer failed to deposit the tax, and that the appropriate remedy was to proceed against the defaulting selling dealer. The Gauhati High Court also noted that the Division Bench had held that Sections 16(2)(c) and 16(2)(d) of the Assam Goods and Services Tax Act, 2017 could be read down by applying that proposition.
