LI Network
Published on: January 24, 2024 at 15:03 IST
Calcutta High Court has recently ruled that a writ petitioner cannot claim the benefit of input tax credit (ITC) when the payment is made not to the selling dealer but to a third party.
Chief Justice T.S. Sivagnanam and Justice Supratim Bhattacharya observed that the petitioner cannot amend the statute to assert entitlement to ITC when the payment is directed to a third party, based on specific instructions.
In a challenge against the order issued by the West Bengal Taxation Tribunal, the petitioner was denied ITC due to payments made to a third party on behalf of the selling dealer.
The Court underscored the well-established legal principle that ITC is a concession provided by the legislator, and its availability is contingent upon fulfilling stipulated conditions. Sub-rule 8 of Rule 19 explicitly mandates that payments to the selling dealer must be made through a check, demand draft, or electronic mode.
The Court emphasized that concessions may carry conditions, and if these conditions are not met, the concession becomes unavailable.
Therefore, the Court affirmed the tribunal’s conclusion, stating that the denial of ITC to the petitioner was justified.
Case Title: Pacharia Exports Private Limited Vs. The Special Commissioner, Commercial Taxes, West Bengal & Ors.