The Patna High Court has ruled that input tax credit (ITC) is not available to a taxpayer if the tax has not actually been paid to the government. M/s Aastha Enterprises vs The State of Bihar [Civil Writ Jurisdiction Case No. 10395 of 2023 dated 18-Aug-2023]

The court held that the conditions stipulated in Section 16 of the Goods and Services Tax (GST) Act, which allow a taxpayer to claim ITC, must be satisfied together and not separately or in isolation.

One of the conditions for claiming ITC is that the tax must have been paid by the supplier to the government. The court held that this condition is mandatory and cannot be waived.

The mere production of tax invoices by the taxpayer is not sufficient to prove that the tax has actually been paid The court also held that the taxpayer has the burden of proving that the tax has been paid The taxpayer cannot simply rely on the supplier's invoice to claim ITC.

The taxpayer must provide additional evidence, such as bank statements or other documents, to show that the tax has been paid.

This ruling is significant because it clarifies the conditions for claiming ITC under the GST Act. It also puts the onus on taxpayers to ensure that they are only claiming ITC for taxes that have actually been paid.

Here are some key takeaways from the ruling: -> ITC is not available if the tax has not actually been paid to the government. -> The taxpayer has the burden of proving that the tax has been paid.

-> The mere production of tax invoices is not sufficient to prove that the tax has been paid. ->The taxpayer must provide additional evidence, such as bank statements or other documents, to show that the tax has been paid.

In this judgement the court relied upon Supreme Court Judgment in the case of M/s Ecom Gill Coffee Trading Prit. Ltd. and declined to place their reliance on M/s D.Y. Beathel (Madras High Court).