Top Stories Supplier Liquidation Triggers GST Demand alleging ITC Claim from GST Return defaulters & Tax Non-Payers: Madars HC allows to Explain Matter [Read Order] The petitioner argued that the taxes were paid to the supplier, M/s. Kamakshi Industries, which had gone into liquidation, and that this should not affect the ITC claim By Navasree A.M – On January 6, 2025 10:55 am – 2 mins read

In a recent ruling, the Madras High Court granted the steel dealer an opportunity to explain discrepancies in their GST returns, specifically related to excess claims of Input Tax Credit (ITC) from cancelled dealers, return defaulters, and tax non-payers as the supplier undergone liquidation.  The petitioner, a dealer in Iron and Steel, had filed its returns and paid the necessary taxes for the 2019-20 period. However, discrepancies were found, including the claim of ITC from a supplier whose taxes had not been filed.

Know Practical Aspects of Tax Planning, Click Here The petitioner argued that the taxes were paid to the supplier, M/s. Kamakshi Industries, which had gone into liquidation, and that this should not affect the ITC claim. The assessing authority had rejected the petitioner’s objections and confirmed the denial of ITC based on the supplier’s failure to file GSTR-3B returns. The petitioner then approached the court, seeking an opportunity to explain the discrepancies. Justice Mohammed Shaffiq, relying on a previous judgment in a similar case, decided to remand the matter. The court set aside the impugned order and allowed the petitioner to make a final submission before the adjudicating authority.  Know Practical Aspects of Tax Planning, Click Here The petitioner was required to deposit 10% of the disputed taxes within four weeks, with adjustments made for any amounts already paid or recovered, including pre-deposits.

If any balance remained, the assessing authority was instructed to notify the petitioner within one week, and the petitioner was given three weeks to settle the remaining amount. The court further directed that the entire process, including verification and balance payment, should be completed within four weeks and failure to comply would result in the restoration of the original order. Additionally, the court clarified that if any bank account attachments or garnishee proceedings were in place, they would be lifted upon compliance with the payment of 10% of the disputed taxes. Mr. P. RajKumar and Mr. C. Harsha Raj, Additional Government Pleader appeared for the petitioner and respondents respectively.