Case Law Details
D.Y. Beathel Enterprises Vs State Tax Officer (Madras High Court)
The petitioners in this case are registered dealers with Nagercoil Assessment Circle, and the main issue revolves around the recovery of input tax credit.
Analysis: The petitioners, who are traders in Raw Rubber Sheets, claim to have purchased goods from Charles and his wife Shanthi. They contend that a substantial portion of the sale consideration, including the tax component, was paid through banking channels. The petitioners availed input tax credit based on the returns filed by the sellers. However, during an inspection by the respondent, it was revealed that Charles and his wife had not paid any tax to the government.
The petitioners argue that the impugned orders levying the entire liability on them should be challenged since the sellers were not involved in the proceedings. They emphasize that the sellers should have been confronted during the enquiry. The respondent, on the other hand, asserts that since the sellers did not pay any tax and the petitioners could not provide proof of payment, it was justified in recovering the amount from the petitioners and reversing the input tax credit.
The learned counsel for the petitioners cites a previous decision of the Madras High Court to support their case. However, it is noted that the applicability of that decision to the current tax regime may not be straightforward. The counsel further highlights a press release by the Central Board of GST council, which states that reversal of input tax credit from the buyer is not automatic in case of non-payment of tax by the seller.
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Very well judgment. In practice, GST officer catches those who are left. Vanish dealer are never prosecuted. Department is sleeping on bogus dealers.