GAUHATI HIGH COURT: PURCHASER CANNOT BE PUNISHED FOR FAILURE OF SELLER TO DEPOSIT TAX

The Gauhati High Court in the case National Plasto Moulding Versus State Of Assam observed and has held that a purchasing dealer cannot be punished for the act of the selling dealer in case wherein the selling dealer had failed to deposit the tax which is being collected by it.

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The bench comprising of Chief Justice Vijay Bishnoi and Justice Suman Shyam in the case was hearing the present matter.

The bench in the case observed that the Department is precluded from invoking Section 9(2)(g) of the DVAT to deny ITC to a purchasing dealer who has bona fide entered into a purchase transaction with the registered selling dealer who has issued a tax invoice wherein reflecting the TIN number.

Further, the bench stated that if in the event that the selling dealer has failed to deposit the tax which is being collected by him from the purchasing dealer, the remedy for the Department would be to proceed against the defaulting selling dealer to recover such tax and not deny the purchasing dealer the ITC.