CRUX:
D.Y. Beathel Enterprises Vs State Tax Officer- Appeal Number: W.P.(MD) Nos. 2127 of 2021-In the present Appeal the issue involved was whether respondent can impose entire tax liability on Petitioner, without involving the seller, where government has not remitted to the government by seller.
DATE OF JUDGMENT:
24/02/2021
JUDGE:
Justice G.R.Swaminathan
PARTIES:
D.Y. Beathel Enterprises (Appellant)
State Tax Officer (Respondent)
SUMMARY
In the present Appeal the issue involved was whether respondent can impose entire tax liability on Petitioner, without involving the seller, where government has not remitted to the government by seller.
Background Facts
D.Y. Bethel Enterprises, the buyer, purchased goods from the Seller Charles and the firm held by his wife. They have paid all the money of invoices including tax to the seller and availed ITC, referring to Section16. Still, the department ordered for reversed ITC and instructed the recovery of the sum from the buyer.
Therefore, the buyer moved to High Court for relief from the recovery. They further prayed for the first action to be taken against the seller, alleging that the action taken by the department is wrong.
What was the stand of the Department
Department presented that they have to attest to the seller, but the goods movement is not attested yet, and hence the ITC of the buyer needs to be reversed. Since the department was of the view that they can recover dues for Seller or Buyer to uphold the interest of revenue.
High Court Judgment
The HC, after verifying all the submissions and facts settled that action needs to take at first against the seller to recover the tax and thereafter action should also be taken against the buyer. It was further observed that the seller was also registered under the same GST jurisdiction, but what action was taken for recovery was not placed in front of the Court.
The Court submitted that in certain cases such as absconding by the seller, action against the buyer needs to be taken as per the department’s circular. Thus, the case remanded back for proper action and recovery against the seller.
The Madras High Court gave relief to the recipient of goods from the reversal of ITC when any action was not taken by the GST department against the defaulting seller who did not pay the tax collected from the recipient.
Conclusion
The High Court of Madras in the present case quashed the order passed by the officer imposing the entire tax liability on the purchasing dealer without the involvement of any other seller, where tax payment has been made by the purchasing dealer, but the same has not been remitted to the seller by the Government. So, it was held that omission on the seller's part to remit the tax should be viewed seriously and strict action needs to be taken against the seller.
