Responsibility of Purchaser is limited to the extent of verifying GST Registrstion of the Supplier on GST Portal โ Honโble Andhra Pradesh High Court
Here is an interesting judgement by AP High Court on the issue of claim of ITC in GST. It has been held by the High Court that the ๐๐๐ฌ๐ฉ๐จ๐ง๐ฌ๐ข๐๐ข๐ฅ๐ข๐ญ๐ฒ ๐จ๐ ๐๐ฎ๐ซ๐๐ก๐๐ฌ๐๐ซ ๐ข๐ฌ ๐ฅ๐ข๐ฆ๐ข๐ญ๐๐ ๐ญ๐จ ๐ญ๐ก๐ ๐๐ฑ๐ญ๐๐ง๐ญ ๐จ๐ ๐ฏ๐๐ซ๐ข๐๐ฒ๐ข๐ง๐ ๐๐๐ ๐๐๐ ๐ข๐ฌ๐ญ๐ซ๐๐ญ๐ข๐จ๐ง ๐จ๐ ๐ญ๐ก๐ ๐๐ฎ๐ฉ๐ฉ๐ฅ๐ข๐๐ซ ๐จ๐ง ๐๐๐ ๐๐จ๐ซ๐ญ๐๐ฅ=.
The case detail is as under:
๐/๐ฌย ๐๐ซ๐ก๐๐๐งย ๐ ๐๐ซ๐ซ๐จ๐ฎ๐ฌย ๐๐ง๐ย ๐๐จ๐ง-๐ ๐๐ซ๐ซ๐จ๐ฎ๐ฌย ๐๐จ๐ฅ๐ฎ๐ญ๐ข๐จ๐ง๐ฌย ๐๐ฏ๐ญ.ย ๐๐ญ๐.
๐๐ฌ.
ย ๐๐๐ฉ๐ฎ๐ญ๐ฒย ๐๐ฌ๐ฌ๐ข๐ฌ๐ญ๐๐ง๐ญย ๐๐จ๐ฆ๐ฆ๐ข๐ฌ๐ฌ๐ข๐จ๐ง๐๐ซ
[๐๐ซ๐ข๐ญ ๐๐๐ญ๐ข๐ญ๐ข๐จ๐ง ๐๐จ. ๐๐๐๐๐/๐๐๐๐ | ๐๐ซ๐๐๐ซ]
Facts:
The Petitioner, a trader in iron scrap, bought iron scrap from M/s K.S. Enterprises in Vijaywada and sold it to M/s Radha Smelters Pvt. Ltd. in Sankarampet with valid documentation. The goods were being transported by Mr. T. Srinivasulu’s vehicle. The Respondent intercepted the goods in transit, contending that supplier โ M/s K.S. Enterprises, had no business location in Vijaywada, and took action against supplier under Section 130 of the CGST Act, 2017. The Petitioner argued that the Respondent ignored the documents evidencing its ownership of goods during interception. They emphasized that action should be taken against the Transporter as per Section 129 of the CGST Act, 2017, since the Petitioner was the one transporting the goods. The Petitioner also stated that they had no obligation to verify the supplier’s business location beyond checking their GST registration and making payments. Further, that the Respondent’s suspicions about the supplier’s registration shouldn’t impact the legitimacy of the transaction between the Petitioner and the Supplier.
Issue: Can goods of the assessee be confiscated based on the proceedings initiated against the supplier of the assessee?
Held:
The Court concluded that while the Respondent can take action against the Supplier due to their absence at the specified address and lack of business premises, confiscating the Petitioner’s goods solely based on their purchase from the Supplier is not justified. The Court found doubts about the Petitioner’s claim of purchasing goods, given the uncertainty about the Supplier’s existence. Therefore, the Respondent can proceed under Section 129 of the CGST Act against the Petitioner. This entails initiating an inquiry and allowing the Petitioner a chance to present their case. The Respondents were directed to release the detained goods in favour of the Petitioner on deposit of 25% of the value of goods and execute a bond for the balance and shall also release the vehicles in favour of the transporter.
The Honโble Court concludingly held that the Petitionerโs responsibility was limited to the extent of establishing that he bona-fidely purchased goods from the Supplier for valuable consideration after verifying the GST registration of the said supplier on the GST portal.
