K.R. Anand Vs Government of NCT of Delhi & Ors (Delhi High Court)
Delhi High Court has delivered a significant ruling in the case of K.R. Anand Vs Government of NCT of Delhi & Ors, addressing the denial of Input Tax Credit (ITC) to purchasing dealers when selling dealers fail to remit collected Value Added Tax (VAT) to the government. The Court meticulously examined Section 9(2)(g) of the Delhi Value Added Tax (DVAT) Act, ultimately interpreting it in a manner that protects diligent purchasers.
VAT, as defined by Section 2(1)(r) of the DVAT Act, is an indirect tax. While the seller is primarily responsible for depositing this tax with the government, its financial burden is invariably passed on to the purchaser as part of the sale price. To claim ITC, a purchasing dealer is required to undertake specific due diligence: verify the selling dealer’s registration, ensure the receipt of a proper tax invoice with the Taxpayer Identification Number (TIN), and check the seller’s status on the Department’s portal. However, the Court acknowledged a critical limitation: once these steps are completed, the buyer has no reasonable means to ensure that the seller actually deposits the collected tax or adjusts it lawfully.
