No liability where contract is cancelled before supply of goods
The assessee entered into an agreement with the vendor for purchase of goods. The assessee paid an advance amount to the vendor and also paid the GST on advance amount. The vendor paid the GST amount to the Government from the advance amount received from the assessee. However, the vendor did not supply the goods, and the agreement was cancelled. The assessee recovered the advance amount by encashing the bank guarantee furnished by the vendor.
Thereafter, the assessee applied for a refund of the GST paid on the advance amount. However, the refund application was rejected, and the assessee filed an appeal before the appellate authority, which was also dismissed.The writ petition was filed against an appeal rejection order.
The High Court directs refund of entire GST amount . There was no liability to pay GST since the vendor did not supply the goods and the agreement was cancelled. Accordingly, the amount of GST paid by the vendor was to be refunded to the assessee.
The copy of the order is as under:
