High Court of Rajasthan
Shree Karni Electrovision v. Union of India
D.B. CIVIL WRIT PETITION NO. 4266 OF 2023
The ruling in brief
Where petitioner firm availed ITC on procurement of goods but Insolvency proceedings were initiated against supplier under IBC before deposit of collected GST, statutory condition mandated actual payment of tax by supplier and, thus, recipient could not avail ITC unless supplier had paid tax, and on supplier's default, recovery of such ITC from recipient was permissible in law.
Where petitioner challenged Section 16(2)(c) on grounds of practical impossibility in verifying supplier’s tax payment for ITC eligibility, constitutional validity of section 16(2)(c) was upheld as conditions to avail ITC are to be satisfied conjointly; no constitutional or legal infirmity or basis to read down provision exists based on lex non cogit ad impossibilia principle.
Where petitioner availed ITC on GST charged by supplier who did not deposit GST collected and insolvency proceedings under IBC was initiated, IBC did not override statutory ITC condition in Section 16(2)(c), and ITC denial was justified
Provisions considered
Section 16, read with Sections 41 and 155, of Central Goods and Services Tax Act, 2017/Rajasthan Goods and Services Tax Act, 2017; Section 16, read with section 155 of Central Goods and Services Tax Act, 2017/Rajasthan Goods and Services Tax Act, 2017; Section 16 of Central Goods and Services Tax Act, 2017/Rajasthan Goods and Services Tax Act, 2017 - Section 31 of Insolvency and Bankruptcy Code, 2016
This summary is for general information and is not legal advice. Read the full decision and the applicable law before relying on it.