Patna HC: Purchaser cannot raise ITC-claim unless supplier pays tax to Govt.

Patna HC upholds denial of ITC benefit to purchasing dealer (assessee) where the supplying/selling dealer has not paid up the amounts to the Government, despite collection of tax from the purchasing dealer; Referring to the case of Ecom Gill Coffee Trading Pvt Ltd, HC adds that, even if assessee produces not only the invoices but also account details and documents evidencing transportation of goods, “this does not absolve the assessee from the rigor provided under sub-clause (c) of Section 16(2)” and therefore, “unless the credit is available in the ledger account of the purchasing dealer ….” , ITC would not be available; Inviting attention to the nomenclature of ITC, HC explains that it itself contemplates a credit being available for the purchasing dealer in its credit ledger by way of payment of tax by the supplier to the Government; As a corrollary, envisages that “there should be credit available in the credit ledger of the purchaser to claim ITC and otherwise the claim would be frustrated”; So far as the contention of double taxation is concerned, HC remains unimpressed especially since the claim is denied only when the supplier who collected tax from the purchaser fails to pay it to the Government; Further, on the assertion that there are statutory measures to recover tax from selling dealer, HC remarks “mere fact that there is a mode of recovery…would not absolve the liability of the tax payer” and explains in even if the Govt recovers tax from selling dealer by utilizing the available machinery, the purchasing dealer could possibly seek refund but “as long as the tax paid by the purchaser to the supplier, is not paid up to…the purchaser cannot raise a claim of Input Tax Credit under the statute”.