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GST – Jharkhand High Court: ITC denial due to supplier's default - Held that authorities cannot evade action citing supplier's registration was Central; They are duty-bound to act under Section 76(2) – Petition allowed [Order attached]

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30-Jun-2025 14:34:35

Order Date – 13 June 2025

Parties: M/s R.K. Transport & Constructions Ltd. Vs State of Jharkhand, Commissioner, Commercial Taxes department, Joint Commissioner of State Tax, Ranchi Division, Deputy Commissioner of State Taxes, Ranchi West, Deputy Commissioner of State Taxes, Hazaribagh Range & The supplier

Facts –

The Petitioner, M/s R.K. Transport & Constructions Ltd., during October 2020 to March 2021, availed rental services of commercial vehicles from the supplier and paid invoices including CGST and SGST.
Despite payment, the GST component was not reflected in GSTR-2A, as the supplier failed to file GSTR-1. The petitioner issued multiple legal notices and representations to them and the state tax authorities but received no relief or action.

Issue –

Whether the official respondents are empowered and obligated to act against a supplier who collected GST but failed to deposit it to the government?

Order –

The Divisional Bench of Hon’ble High Court observed that it is not permissible for the official respondents to contend that they need not do anything since the supplier is registered with the CGST authorities. It is their bounden duty to take action against the supplier under sub-section (2) of Section 76 forthwith and there is no valid excuse for its inaction.
They also cannot contend that petitioner had no locus standi to file the writ petition because the petitioner has filed material to show that as per the invoices/bill raised by the supplier, it had made payments supported by bank records including the GST to the supplier which he has not shown to have passed on to the Government.
A totally false plea is raised in its counter affidavit to the effect that it is not liable for paying tax under the GST Act. If the the supplier was not liable to pay any tax under the JGST Act, 2017, why in the invoices raised by it, it had included the CGST and JGST components, is not explained by it.
Hence the writ petition is allowed and the Respondents are directed to initiate proceedings under Section 76 the Jharkhand GST Act, 2017 against the supplier.