Tirupati Balaji Traders Vs Union of India (Kerala High Court)
Summary: In Tirupati Balaji Traders v. Union of India (July 24, 2024), the Kerala High Court upheld that the right to claim Input Tax Credit (ITC) under Section 16 of the CGST Act is conditional. Tirupati Balaji Traders contended that if ITC is denied to a purchasing dealer who has already paid the full tax to the supplier, it would undermine provisions under the CGST Act and the Insolvency and Bankruptcy Code (IBC). They argued that ITC should be claimable even if the supplier defaults on tax payment. However, the Court, referring to previous judgments, reiterated that ITC is a statutory benefit contingent on compliance with specified conditions, particularly requiring that the tax be paid to the government by the supplier. The Court also cited the M. Trade Links decision, affirming the validity of Sections 16(2)(c) and 16(4) of the CGST Act, which enforces time limits and compliance conditions for ITC claims. Additionally, it referenced the ongoing Supreme Court challenge to Section 16(4) in Shanti Motors v. Union of India. This ruling aligns with prior judgments, solidifying that purchasing dealers can only claim ITC if the supplier has fulfilled the tax payment obligations. Consequently, the petition by Tirupati Balaji Traders was dismissed, reinforcing the conditional nature of ITC under GST law.
