Shaurya Alloys Pvt Ltd Vs State of Punjab And Another (Punjab and Haryana High Court)
The Punjab and Haryana High Court disposed of a batch of 424 writ petitions concerning the scope and constitutional validity of Section 16(2)(c) of the Goods and Services Tax Act, 2017, read with Section 155. The petitioners questioned whether purchasers who had paid GST to their suppliers could be required to ensure its deposit with the Government when they had no means of verifying that payment. Alternatively, they sought a reading down of the provision to restrict reversal to cases involving fraud, collusion or non-existent transactions. The Court examined the original return-matching architecture, its non-implementation, the substitution of Section 41 and omission of Sections 42 and 43 from 01.10.2022, and the introduction of Rule 37A from 26.12.2022. It rejected the constitutional challenge, holding that actual payment of tax to the Government forms the foundation of the statutory ITC concession. Taking account of Maruti Enterprises v. Union of India and Bhandari Scrap Traders v. Union of India, it declined to confine Section 16(2)(c) only to fraudulent or collusive transactions. However, the provision could not be isolated from the recovery provisions, procedural safeguards and statutory framework applicable to the relevant tax period.
