Buyer Not Liable For Seller's Default: Calcutta High Court Set Aside ITC Reversal Demand Against Buyer

The Calcutta High Court has held that before directing the recipient of service or buyer to reverse the input tax credit and remit it to the government, the department ought to have taken action against the selling dealer.The bench of Chief Justice T.S. The Calcutta High Court has held that before directing the recipient of service or buyer to reverse the input tax credit and remit it to the government, the department ought to have taken action against the selling dealer. The department reversed the input tax credit availed by the appellant under the provisions of the West Bengal Goods and Services Tax Act, 2017. The court stated that before directing the appellant to reverse the input tax credit, the department ought to have taken action against the supplier the selling dealer and unless and until the department is able to bring out the exceptional case where there has been collusion between the appellant and the supplier or where the supplier is missing or has closed down its business or does not have any assets and such other contingencies, straight away the appellant was not justified in directing the appellant to reverse the input tax credit availed by them.