Payment To Third Party Instead Of Selling Dealer, ITC Not Allowable: Calcutta High Court

The Calcutta High Court has held that the writ petitioner is not entitled to the benefit of input tax credit as he has not paid the amount to the selling dealer but to a third party.

The bench of Chief Justice T.S. Sivagnanam and Justice Supratim Bhattacharya has observed that the writ petitioner is precluded from adding words to a statute to state that he will be entitled to the benefit of the input tax credit, though he has not paid the amount to the selling dealer to a third party based on certain instructions.

The petitioner has challenged the order passed by the West Bengal Taxation Tribunal. The petitioner was denied the input tax credit on account of payments made to a third party on behalf of the selling dealer.

The court noted that it is a well-established legal principle that input tax credit is a form of concession provided by the legislator and is available only if the conditions stipulated are fulfilled. Sub-rule 8 of Rule 19 makes it clear that the payment has to be made to the selling dealer by means of a check, demand draft, or electronic mode.

The court held that a concession can always come with conditions, and if the conditions are not fulfilled, the concession is not available. Therefore, the conclusion arrived at by the tribunal deserves to be confirmed.

Counsel For Petitioner: Govind Jethalia

Counsel For Respondent: Anirban Ray

Case Title: Pacharia Exports Private Limited Vs. The Special Commissioner, Commercial Taxes, West Bengal & Ors.

Case No.: W.P.T.T. 1 of 2023

Click Here To Read The Order