- The Patna High Court has ruled in the case of Aastha Enterprises v. State of Bihar that a recipient cannot claim Input Tax Credit (ITC) if their supplier has not paid GST to the Government.
- The court held that the conditions mentioned in Section 16 of the Central Goods and Services Tax Act, 2017 must be satisfied together, including the existence of a tax invoice issued by the supplier, proof of receipt of goods, and proof that tax has been paid to the Government.
- The burden of proof is on the recipient to show that tax has been discharged to the Government.
- The court also noted that the Government could recover amounts from the supplier, and if such amounts are recovered at a later point in time, the recipient who paid the tax to their supplier could possibly seek a refund.
- However, until the tax is paid to the Government by the supplier, the recipient cannot claim ITC. It is important for taxpayers to build certain internal and external checks for compliance with Section 16(2)(c) of the Act.
Source Gaba & Co
