Case Law Details

Case Name : Rahul Agencies Vs Union Of India (Rajasthan High Court)
Appeal Number : Civil Writ Petition No. 7351 of 2021
Date of Judgement/Order : 27/05/2021
Related Assessment Year :

Rahul Agencies Vs Union Of India (Rajasthan High Court)

1. To issue notices to respondents wherein validity of Section 16(2)(c) read with Rule 86A are challenged.

2. A Division Bench of the  Rajasthan High Court issued Notices to Respondents including Finance ministry on Section16(2)(C) which provides that input tax credit (ITC) must be allowed to the recipient only when the supplier had discharged the output liability through utilisation of the ITC admissible in respect of the supply or by cash.

3. The matter was argued by Advocate Vikas Balia and Advocate Mayank Taparia on the ground that denying ITC to a buyer of goods and services would tantamount to treating both the ‘guilty purchasers’ and the ‘innocent purchasers’ at par whereas they constitute two different classes.

4. The petition further stated that denying ITC to a buyer of goods or services for default of the supplier of goods or services would tantamount to shifting the incidence of tax from the supplier to the buyer, over whom it has no control whatsoever, is arbitrary and irrational & therefore violative of the Article 14, Article 19(1)(g) and Article 300A of the Constitution of India.

5. It would also clearly frustrate the underlying objective of removal of cascading effect of tax as stated in the Statement of object and reasons of the Constitution (One Hundred And Twenty-Second Amendment) Bill, 2014.

Also Read :Section 16(2)(c) CGST Act 2017 Vires challenged in Orissa HC

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