K.V. Joshy & C.K. Paul Vs Assistant Commissioner (Kerala High Court)
Kerala High Court held that proceedings against petitioner [recipient] for Input Tax Credit mis-match cannot be sustained since no proceedings have been initiated against the supplier. Accordingly, proceedings initiated against recipient is not legally sustainable.
Facts- The petitioner is an assessee under the provisions of CGST Act and this writ petition is submitted by the petitioner, challenging the show cause notice issued under Sec.73 of the CGST Act. As per the notice, the petitioner was directed to show cause, as to why the input tax credit claimed by the petitioner pertaining to the assessment year 2019-2020 should not be disallowed and recovered from the petitioner. In the notice, a penalty was also sought to be imposed in respect of the same. It is mainly contested that since proceedings have been initiated against the suppliers, the petitioner cannot be held responsible.
Conclusion- Held that it is an admitted position that, no proceedings have been initiated against the suppliers, who are 2nd and 3rd respondents herein, before the issuance of notice under Section 73. This amounts to the failure on the part of the official respondents in following the statutory stipulations contained in Section 42. It was further held that, such proceedings would be justified against the purchaser, only in a case where the Department is able to to show that the purchasing dealer and the selling dealer acted in collusion, however, none of the situations referred to above are admittedly in existence in this case. Therefore, the only conclusion possible is that, the proceedings initiated against the petitioner is not legally sustainable.
