S. 9 (2) (g) of DVAT Act cannot be Invoke to Deny ITC to a Bonafide Purchaser: Gauhati HC [Read Order]
While quashing the show cause notices and the consequential orders, the court granted the liberty to the Department to act in those cases, where the purchase transactions are not bona fide, in accordance with law
![S. 9 (2) (g) of DVAT Act cannot be Invoke to Deny ITC to a Bonafide Purchaser: Gauhati HC [Read Order]](https://www.taxscan.in/wp-content/uploads/2024/08/DVAT-Act-DVAT-Input-Tax-Credit-Value-Added-tax-Gauhati-High-Court-Gauhati-HC-VAT-ITC-Taxscan.jpg "S. 9 (2) (g) of DVAT Act cannot be Invoke to Deny ITC to a Bonafide Purchaser: Gauhati HC [Read Order]")
In a recent case,the Gauhati High Court has held that section 9 (2) (g) of Delhi Value Added tax ( VAT ) Act ,2004 cannot be Invoke to deny Input Tax Credit ( ITC ) to a bonafide purchaser. It was views that a purchasing dealer cannot be punished for the act of the selling dealer in case the selling dealer had failed to deposit the tax collected by it. National Plasto Moulding,...
In a recent case,the Gauhati High Court has held that section 9 (2) (g) of Delhi Value Added tax ( VAT ) Act ,2004 cannot be Invoke to deny Input Tax Credit ( ITC ) to a bonafide purchaser. It was views that a purchasing dealer cannot be punished for the act of the selling dealer in case the selling dealer had failed to deposit the tax collected by it.
National Plasto Moulding, the petitioners/assessee have challenged the validity of Sections 16(2)(c) and 16(2)(d) of the Assam Goods and Services Tax Act, 2017 as well as the validity of Sections 16(2)(c) and 16(2)(d) of the Central Goods and Services Tax Act, 2017 along with the show cause notices issued to the petitioners.
The assessees contended that the provisions of Section 9(2)(g) of the Delhi Value Added Tax Act, 2004 can be read down and the demand raised against the purchasing dealers, who have entered into bona fide transactions, cannot be sustained.
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The division bench of Chief Justice Vijay Bishnoi and Justice Suman Shyam has observed that the Department is precluded from invoking Section 9(2)(g) of the DVAT to deny ITC to a purchasing dealer who has bona fide entered into a purchase transaction with a registered selling dealer who has issued a tax invoice reflecting the TIN number.
In light of judgement in the case of On Quest Merchandising India Private Limited vs. Government of NCT of Delhi & Ors., it was held that the purchasing dealer is being asked to do the impossible, i.e., to anticipate the selling dealer who will not deposit with the government the tax collected by him from those purchasing dealers and therefore avoid transacting with such selling dealers.
It was observed that Section 9(2)(g) of the DVAT Act places an onerous burden on a bona fide purchasing dealer.
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While quashing the show cause notices and the consequential orders, the court granted the liberty to the Department to act in those cases, where the purchase transactions are not bona fide, in accordance with law.
A. Saraf, P.K. Bora appeared for petitioner. S.C. Keyal appeared for respondent.
To Read the full text of the Order CLICK HERE
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