The Gauhati High Court ruled that the tax paid to the supplier is not remitted to the state exchequer and the purchaser can’t be punished.
A. Saraf, senior counsel for the petitioners submitted that though in the batch writ petitions, the petitioners have challenged the validity of Sections 16(2)(c) and 16(2)(d) of the Assam Goods and Services Tax Act, 2017 as well as the validity of Sections 16(2)(c) and 16(2)(d) of the Central Goods and Services Tax Act, 2017 along with the show cause notices issued to the petitioners, however, the controversy involved in these writ petitions is squarely covered by the decision of the Delhi High Court in the case of On Quest Merchandising India Private Limited -Vs- Government of NCT of Delhi & Ors., wherein it was categorically held that a purchasing dealer cannot be punished for the act of the selling dealer in case the selling dealer had failed to deposit the tax collected by it.
It was submitted that the Delhi High Court has observed that the provisions of Section 9(2)(g) of the Delhi Value Added Tax Act, 2004 can be read down and the demand raised against the purchasing dealers, who have entered into bona fide transaction, cannot be sustained.
The bench observed that before the Delhi High Court, the validity of Section 9(2)(g) of the Delhi Value Added Tax Act, 2004 was under challenge. The said provisions of the Delhi Value Added Tax Act are analogous to the provisions of Sections 16(2)(c) and 16(2)(d) of the Assam Goods and Services Tax Act, 2017 as well as Sections 16(2)(c) and 16(2)(d) of the Central Goods and Services Tax Act, 2017.
The court viewed that the controversy raised in the batch of writ petitions is squarely covered by the decision of the Delhi High Court in the case of On Quest Merchandising India Private Limited.
Case Information
Case Name: National Plasto Moulding A Partnership Firm V/S The State Of Assam
Judicial Level & Location : Gauhati High Court
Case Number : WP(C)/2863/2022
Date of Decision : 05/08/2024
Decision in favor of: Petitioner
Judges: Chief Justice Vijay Bishnoi And Justice Suman Shyam