The Orissa High Court issued the notices to the Government on a plea challenging the denial of ITC to the buyer of goods, services for default of the supplier.
The petitioner, M/s.Shree Gobind Alloys Pvt. Ltd. challenged the vires of section 16 (2) (c) of the Central Goods and Services Tax Act, 2017and section 16 (2) (c) of the Orissa Goods and Services Tax Act.
Section 16(2)(c) of CGST/ OGST Act, 2017 provides Input Tax Credit that should be allowed to the recipient only when the supplier has discharged the Output Liability through the utilization of input tax credit admissible in respect of the said supply or by cash.
Mr. P K Harichandan, the Counsel for the Petitioner requested the court to Issue Writ of Mandamus and/or any other appropriate writ(s) to be read down Section 16(2)(c) of the CGST Act/OGST Act, if constitutional validity of the impugned provision of law is upheld, by holding that ITC will be denied only, where purchases are proved to be collusive and in the nature of sham transactions.
The petition added, denying ITC to a buyer of goods or services for default of the supplier of goods or services would tantamount to shifting the incidence of tax from the supplier to the buyer, over whom it has no control whatsoever, is arbitrary and irrational & therefore violative of the Article 14, Article 19(1)(g) and Article 300A of the Constitution of India.
Therefore the division bench headed by Chief Justice Dr. S. Muralidhar directed the service of notice on the respondents which will be returnable on 21st September 2021.
The Court listed the matter on 21st September, 2021 for the next date of hearing. Advocate P.K Harichandan appeared for the petitioner.
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