J.R. Beverages Private Limited & Anr. Vs Union Of India & Ors. (Gujarat High Court)
In the case of J.R. Beverages Private Limited & Anr. Vs Union Of India & Ors., the Gujarat High Court considered a constitutional challenge to Section 16(2)(c) of the GST Act, 2017. The petitioners argued that the provision imposes undue burdens on purchasers to verify sellers’ tax compliance for claiming Input Tax Credit (ITC). Specifically, they must confirm that sellers are registered and have paid GST for supplies. The petitioners contended this is unreasonable, as it requires verifying past transactions and tax payments by the seller.
The Court issued a notice to the respondents and provided interim relief by restraining authorities from taking coercive actions against the petitioners during the case’s pendency. The matter is set to be heard alongside related cases, highlighting ongoing concerns regarding the legal validity of Section 16(2)(c) and its implications for taxpayers.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. This petition is filed challenging the vires of the provisions of Section 16(2)(c) of the State Goods and Services Tax Act, 2017 (SGST Act for short) identical to the Central Goods and Services Tax Act, 2017.
2. Learned advocate Mr. Abhay Desai for the petitioners submitted that the effect of the provisions of Section 16(2)(c) of the ‘SGST Act is that the purchaser of goods for seeking entitlement for Input Tax Credit (TTC for short), is imposed with discharging of burden of two kinds. The first burden which the purchaser is required to discharge, it was submitted, is that the seller is registered under the Goods and Services Tax and that he has actually paid the tax on the goods supplied by him. The second burden to be discharged by purchaser is in respect of such supply made by the seller to him, the seller has actually paid the GST for which Input Tax Credit is admissible in respect of the said supply. It was therefore submitted that the purchaser will be required to show that the seller has in respect of all past transaction made by him in relation to goods supplied by him, had utilized the input tax credit, which was in respect of such supplies.
