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Proceedings u/s 74 of GST Act cannot be initiated against the buyer for availing ITC in a fraudulent manner for the default of supplier: High Court

The appellant is in the retail and wholesale business of iron scrap.

The appellant had purchased goods with proper invoices, and made proper payments through banking channels along with applicable GST.

The details of the invoices and the payment of the GST have been recorded in his books of accounts.

The supplier of the appellant had received GST from the appellant when they had supplied their goods to the appellant’s company, and the appellant in this backdrop had rightly availed the input tax credit for the tax period April 2021 to March 2022.

He had paid GST and it was reflected in invoices and E-way bills. If the appellant’s suppliers committed a default, can the purchasing dealer be made to bear the consequences of denying the ITC.

The short question for consideration in the present special appeal is that the appellant had purchased the goods from the suppliers through proper invoices, and has made proper payments through banking channel along with applicable GST. If the suppliers have not filed their returns, then proceedings under section 74 of the GST Act 2017, cannot be initiated against the appellant for availing the benefit of ITC in a fraudulent manner.

Learned counsel for the appellant further stated that demand of Rs.79,41,598/- was raised by the respondent vide intimation dated 30.01.2023, which was decreased to Rs.46,84,278/- in a show cause n.......
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May 10, 2024


Useful article on latest issue
By: Dinkar Gadekar | Dt: May 11, 2024

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