Responsibility of Purchaser is limited to the extent of verifying GST Registrstion of the Supplier on GST Portal โ€“ Honโ€™ble Andhra Pradesh High Court


Responsibility of Purchaser is limited to the extent of verifying GST Registrstion of the Supplier on GST Portal โ€“ Honโ€™ble 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 ๐‘๐ž๐ฌ๐ฉ๐จ๐ง๐ฌ๐ข๐›๐ข๐ฅ๐ข๐ญ๐ฒ ๐จ๐Ÿ ๐๐ฎ๐ซ๐œ๐ก๐š๐ฌ๐ž๐ซ ๐ข๐ฌ ๐ฅ๐ข๐ฆ๐ข๐ญ๐ž๐ ๐ญ๐จ ๐ญ๐ก๐ž ๐ž๐ฑ๐ญ๐ž๐ง๐ญ ๐จ๐Ÿ ๐ฏ๐ž๐ซ๐ข๐Ÿ๐ฒ๐ข๐ง๐  ๐†๐’๐“ ๐‘๐ž๐ ๐ข๐ฌ๐ญ๐ซ๐š๐ญ๐ข๐จ๐ง ๐จ๐Ÿ ๐ญ๐ก๐ž ๐’๐ฎ๐ฉ๐ฉ๐ฅ๐ข๐ž๐ซ ๐จ๐ง ๐†๐’๐“ ๐๐จ๐ซ๐ญ๐š๐ฅ=.


The case detail is as under:

๐Œ/๐ฌย ๐€๐ซ๐ก๐š๐š๐งย ๐…๐ž๐ซ๐ซ๐จ๐ฎ๐ฌย ๐š๐ง๐ย ๐๐จ๐ง-๐…๐ž๐ซ๐ซ๐จ๐ฎ๐ฌย ๐’๐จ๐ฅ๐ฎ๐ญ๐ข๐จ๐ง๐ฌย ๐๐ฏ๐ญ.ย ๐‹๐ญ๐.


ย ๐ƒ๐ž๐ฉ๐ฎ๐ญ๐ฒย ๐€๐ฌ๐ฌ๐ข๐ฌ๐ญ๐š๐ง๐ญย ๐‚๐จ๐ฆ๐ฆ๐ข๐ฌ๐ฌ๐ข๐จ๐ง๐ž๐ซ

[๐–๐ซ๐ข๐ญ ๐๐ž๐ญ๐ข๐ญ๐ข๐จ๐ง ๐๐จ. ๐Ÿ๐Ÿ“๐Ÿ’๐Ÿ–๐Ÿ/๐Ÿ๐ŸŽ๐Ÿ๐Ÿ‘ | ๐Ž๐ซ๐๐ž๐ซ]

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?

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 Honโ€™ble Court concludingly held that the Petitionerโ€™s 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.