Maruti Enterprise, Through Its Authorized Partner, Jigneshbhai Bharatbhai Tarpara Vs Union of India & Ors. (Gujarat High Court)
The Gujarat High Court considered a batch of writ petitions challenging the constitutional validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017, with Special Civil Application No. 18080 of 2023 treated as the lead matter. The petitioners contended that Section 16(2)(c), which conditions entitlement to Input Tax Credit (ITC) upon actual payment of tax by the supplier to the Government, was arbitrary, ultra vires, and violative of Articles 14, 19(1)(g), 265 and 300A of the Constitution. Alternatively, they sought a reading down of the provision so that it would apply only to fraudulent or collusive transactions and not to bona fide purchasers. Their principal grievance was that ITC was denied solely because suppliers failed to deposit tax collected from purchasers, despite purchasers having complied with all statutory obligations within their control. They relied upon the statutory GST return mechanism, Forms GSTR-1, GSTR-2A, GSTR-2B and GSTR-3B, contending that purchasers had no statutory means of verifying suppliers’ tax payments and could not be required to perform an impossible obligation. They further argued that genuine purchasers and fraudulent purchasers were treated alike, resulting in hostile discrimination, impermissible shifting of the supplier’s tax burden to the purchaser, retrospective deprivation of vested ITC reflected in GSTR-2B, and double taxation contrary to the object of the GST regime. The maxim Lex Non Cogit Ad Impossibilia and several judicial precedents, including decisions under the Delhi VAT Act, were relied upon.
