NEW DELHI: Writs are piling up in different high courts (HCs) as several businesses are unable to avail the input tax credit (ITC) due to a provision of GST law which requires a taxpayer to reverse the ITC availed if any of its vendors has failed to pay GST.
In a recent writ filed in HC, Mumbai-based event management company Erfolg has challenged the constitutional validity of the provisions. As per experts, in aggregate the amount involved in such cases would be quite high as many have filed writ petitions in courts across the country.
However, TNIE couldn’t find out the exact number of such cases but experts affirmed many such cases have surfaced. “There have been several cases where tax has not been paid by the vendor and the credit was availed by the recipient after duly paying consideration and the GST.
In such cases, the statute requires the recipient to reverse the credit and this poses great difficulty on the recipient as the recipient has already paid the entire amount along with tax to the vendor,” Abhishek A Rastogi, founder at Rastogi Chambers, who is arguing on provisions that require reversal of tax paid by recipient, duly complied with all payment formalities.