ITC claim against supplier gone into liquidation was to be adjudicated subject to deposit of 10% of disputed taxes

Tvl.Sri Renga Steels Vs Assistant Commissioner (ST) (Madras High Court)

Conclusion: Assessee was granted an opportunity to explain discrepancies in their GST returns, specifically related to excess claims of Input Tax Credit (ITC) from cancelled dealers, return defaulters, and tax non-payers as the supplier undergone liquidation subject to  deposit 10% of the disputed taxes as admitted by assessee and the respondent, within a period of four weeks from the date of receipt of a copy of this order.

Held: Assessee was a dealer in Iron and Steel, had filed its returns and paid the necessary taxes for the 2019-20 period. However, discrepancies were found, including the claim of ITC from a supplier whose taxes had not been filed. Assessee argued that taxes were paid to the supplier, M/s. Kamakshi Industries, which had gone into liquidation, and that this should not affect the ITC claim. AO had rejected assessee’s objections and confirmed the denial of ITC based on the supplier’s failure to file GSTR-3B returns. Assessee then approached the court, seeking an opportunity to explain the discrepancies. It was held that assessee should deposit 10% of the disputed taxes as admitted by assessee and the respondent, within a period of four weeks from the date of receipt of a copy of this order. If any amount has been recovered or paid out of the disputed taxes, including by way of pre-deposit in appeal, the same would be reduced/adjusted from/towards the 10% of disputed taxes directed to be paid. AO should then intimate the balance amount out of 10% of disputed taxes to be paid, if any, within a period of one week from the date of receipt of a copy of this order. The entire exercise of verification of payment, if any, intimation of the balance sums, if any, to be paid for compliance with the direction of payment of 10% of the disputed taxes, after deducting the sums already paid and payment by assessee of the balance amount, if any, on intimation in compliance of the above direction should be completed within a period of four weeks from the date of receipt of copy of this order.