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Supplier non existent ho gya to kya ITC block hogi

Is video me janiye ki supplier ke bogus ya non existent paye jane par ITC blockage ko leka kya kehta hai kanoon aur kya ho sakte hai is bare me aapke possible arguments ya defence

Recently, as and when the supplier is found to be non-existent, the department is blocking the input tax credit of the recipient. Notably, rule 86A of the Central Goods and Services Tax Rules, 2017 empowers the officer to block the electronic credit ledger, on the basis of the specified situations, of the recipient.

As per one of the specified situations, prescribed under rule 86A, the officer is empowered to block the input tax credit of the recipient, if the credit is taken on the basis of invoices issued by the supplier who is either found to be non-existent or not conducting any business at the registered place.

Now, the question which emerges here is that can input tax credit of the bona fide recipient who entered into genuine purchase transaction be blocked if the supplier was later on found to be non-existence/ bogus?

Hon’ble Orissa High Court in the case of Bright Star Plastic Industries vs. Additional commissioner has held that the burden of proof would be on the department to provide a connivance between the purchaser and the seller. Input tax credit of the purchaser should not be blocked, if the purchase transaction was genuine and the supplier was existing at the time of purchase.

Thus, it can be concluded that in case the supplier was found to be non-existent during subsequent departmental inquiry/ inspection, the input tax credit of the bona fide purchaser should not be blocked.

In such a case either the input tax credit is blocked or the notice is issued to the purchaser, the possible points for defense reply are highlighted hereunder –
• Burden of proof, that the purchase and supplier have connivance, is on the department;
• Favorable judicial ruling like Bright Star Plastic Industries vs. Additional commissioner or LGW Industries Ltd vs. UOI can be relied upon;
• As per doctrine of impossibility, person cannot be said to perform impossible act. The supplier was in existence at the time of purchase and accordingly later non-existence of the supplier should not be the reason for blocking the input tax credit of the recipient.

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