Parties Cannot Deem SGST And CGST As IGST Without Compliance With Taxation Enactment Provisions: Patna High Court

Chief Justice K. Vinod Chandran and Justice Rajiv Roy noted, “In the present case, the petitioner is a dealer registered under the BGST Act and the sale was effected from the State of Jharkhand. However, there is absolutely nothing to prove the movement of goods to the State of Bihar. The mere statement of the Railways that the invoice issued should be deemed to have been issued under the IGST Act, cannot enable the petitioner to seek input tax credit. The transaction between the Railways and the petitioner would not regulate the tax liability and in any event, the tax levied and collected as CGST and SGST would have been credited to the respective head of account.”

“There can be no understanding between the parties to the transaction that what has been paid as SGST and CGST is to be deemed to be paid as IGST without due compliance of th provisions of the taxation enactment. Such understanding cannot also regulate an input tax credit without such credit being shown in the ledger account maintained by the assessee with the Department.”

The petitioner, Vishwanath Iron Store, was an assessee under the goods and services The petitioner, a partnership firm located in Sasaram, Bihar, engaged in the sale and purchase of scrap materials, sought correction of an invoice to avail input tax credit. The issue arose from a successful bid in an e-auction conducted by the East Central Railways, resulting in the petitioner acquiring materials worth Rs. 17 lakhs. The sale invoice, which included CGST and SGST at 9% each, was later identified as requiring correction to IGST due to the goods being taken possession of in Jharkhand and moved outside the State.

The petitioner, asserting lack of awareness among partners regarding tax requirements, highlighted that their tax consultant later pointed out the invoicing error. Despite possessing the materials based on the original invoice, the petitioner was denied input tax credit. The petitioner referenced railway notifications acknowledging the mistake in tax collection and deeming it as IGST rather than CGST and SGST.

Notably, the goods were delivered in Jharkhand, and the sale was recorded as a local transaction, evident from the delivery/sale release order. The petitioner received the goods in Jharkhand, and it was argued that for the sale to be considered interstate, it should have occasioned the movement of goods outside the State. The auction, held in Samastipur, did not automatically classify the sale as interstate, as the goods were to be delivered from Jharkhand. The petitioner contended that unless the sale led to the movement of goods beyond the State, it could not be categorized as an interstate sale.

In this context, the Court reiterated that even in the writ petition there was nothing produced to prove that the goods had, in fact, moved outside the State of Jharkhand.

The Court said, “We also have to notice that the invoice is one issued in assessment year 2017-18. The petitioner has filed the above writ petition in the year 2021 when the enabling provision for claiming input tax credit would not have been available in any event. Section 16(4) of the BGST Act, enables the input tax credit to be taken in respect of any invoice or debit note, in the case of a supplier, goods or services or both, after the due date of furnishing of the return under Section 39, in the month of September following the end of financial year to which such invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.”

“The present invoice is dated 23.10.2017 and hence, the input tax credit has to be claimed before 28.11.2017 or furnishing of the annual return for the assessment year 2017-18, whichever is earlier. There is absolutely no possibility of the input tax credit being availed of at this point,” the Court concluded.

While finding absolutely no reason to direct the Railways to issue a revised invoice nor can the same be permitted, the Court dismissed the writ petition.

Counsel/s For the Petitioner/s: Mr.Gautam Kumar Kejriwal, Advocate

Counsel/s For the Respondent/s: Dr. K. N. Singh, ASG Mr. Anshuman Singh, CGC. Respondent/s: Mr. Raghwanand, GA-11 Mr. Sanjay Kumar Tiwari, AC to GA-11

LL Citation: 2023 LiveLaw (Pat) 134

Case Title: M/s. Vishwanath Iron Store vs. The Union of India

Case No.: Civil Writ Jurisdiction Case No.1384 of 2021

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