Payer can recover GST loss from supplier who failed to remit tax

The Madras High Court has ruled that the GST authorities are not responsible for taking action under Section 76 of the Goods and Services Act, 2017, against a person if he collects the tax for supply of goods from any other person but fails to pay the tax to the government, if the collection of tax was not brought to their notice.

- R SIVAKUMAR @ Chennai

However, the court held that the payer of the tax can initiate proceedings against the person who collected it but not remitted to the government, for incurring loss.

Justice Krishnan Ramasamy issued the ruling recently while dismissing a petition filed by Rajaratnam Sinna Natchiappon, a businessman, who had taken the premises belonging to the second respondent Durai Seenivasan Udayar for rent in Chennai since February 16, 2017.

Natchiappon had been paying GST since July 1, 2017, when the GST Act came into effect. However, Durai had not remitted the tax to the government.