Case Law Details

Case Name : Surat Mercantile Association Vs Union of India (Gujarat High Court)
Appeal Number : R/Special Civil Application No. 15329 of 2020
Date of Judgement/Order : 03/12/2020
Related Assessment Year :
Courts : All High Courts (6267) Gujarat High Court (628)

Surat Mercantile Association Vs Union of India (Gujarat High Court)

Hon’ble Gujarat High Court has issued notice to Centre and State Government on 03.12.2020 in the matter of Surat Mercantile Association. Vs UOI & others, SCA. No. R/SCA/15329/2020, wherein the petitioner has challenged the constitutional validity of Section 16(2)(c) of the CGST Act/WBGST Act, which seeks to deny ITC to a buyer of goods or services, if the tax charged in respect of supply of goods or services has not been actually paid to the Government by the supplier of goods or services.  The petitioner has also challenged the demand of reversal of ITC along with interest only on the basis of allegation that registration has been obtained by some of the supplier of goods on the basis of fake identity proofs and that none of the supplier is found in their Principal Place of business.

The matter was argued by Advocate Vinay Shraff with Advocate Parth Shah 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. 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. 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. On the second issue in the petition, it was stated that in the absence of any finding about petitioners mala fide intention, connivance or wrongful association with the suppliers, no liability can be imposed on it on the principle of vicarious liability on account of fraudulent conduct of the suppliers, who have obtained registration on the basis of fictitious documents.


We have heard Shri Vinay Shraff along with Shri Parth Shah, learned counsel appearing for the petitioners and Shri Chintan Dave, learned Assistant Government Pleader for respondent No.3.

Connect with Special Civil Application No. 15188 of  2020.

Issue notice returnable on 19th January, 2021.

As there is challenge to the constitutional validity of Section 16(2)(c) of the Central Goods & Services Tax Act, 2017 let notices be also issued to the learned Attorney General of India.

Download Judgment/Order

Author Bio

More Under Income Tax

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

January 2021