Order Date – 03 February 2023

Facts –

• The Applicant, M/s Vimal Alloys Pvt. Ltd. is running a furnace at Mandi Gobindgarh and for the purpose of the same, they are procuring ferrous alloys, scrap, gas, and other materials from within the State of Punjab.

Issue –

• Whether the purchaser is entitled to claim Input Tax Credit on the purchases made by it from the seller who had discharged its tax liability but the preceding seller has not discharged its liability under the Act?

Order –

• The AAR observed that from the perusal of the provisions of the section 16(2)(c) CGST Act and PGST Act, it is very much clear that if the seller or preceding sellers have not deposited the tax either in cash or through utilization of input tax credit admissible in respect of the said supply, purchaser is not eligible to claim ITC on such supply.
• Therefore, keeping in view the relevant provisions of Section 16(2)(c) of CGST Act read with PGST Act, it was held that the purchaser is not entitled to claim Input Tax Credit on the purchases made by it from the seller who had discharged its tax liability but the preceding seller has not discharged its liability under the Act.