Input Tax Credit (ITC) under GST — Complete Legal Guide

Of course. As a Senior GST Legal Analyst, here is a structured summary of the judgment. *** ### **Judgment Summary: Esds Software Solution Limited vs Assistant Commissioner Of Commercial** **Date of Judgment:** 22 April, 2025 **Court:** High Court of Karnataka at Bengaluru **Coram:** Hon’ble Mr. Justice S.R. Krishna Kumar --- #### **1. Outcome** The writ petition was **allowed**. The Court directed the GST authorities (Respondents No. 1 to 3) to permit the petitioner to rectify the error in their Form GSTR-1 for the assessment year 2020-21. The authorities were instructed to follow the principles laid out in Circular No. 183/15/2022-GST and consider the petitioner's representations to facilitate the correction, thereby enabling the recipient of the supply to claim their rightful Input Tax Credit (ITC). #### **2. Core Issue** Can a registered person be permitted to rectify a bona fide, inadvertent error in their filed Form GSTR-1 for the period of September 2020, after the statutory time limit has expired, especially when such an error prevents the recipient of the supply from availing Input Tax Credit? #### **3. Key Facts** * **Petitioner:** Esds Software Solution Limited, a supplier of services. * **Recipient:** Larsen and Toubro Limited (Respondent No. 6). * **Transaction Period:** September 2020. * **The Error:** The petitioner issued an invoice to the recipient showing their address in Uttar Pradesh. However, while filing the GSTR-1 return for September 2020, the petitioner inadvertently mentioned the recipient's state as Haryana. * **Consequence:** Due to this mismatch in the place of supply, the recipient (Larsen and Toubro) was unable to view the transaction in their GSTR-2A and consequently could not avail the legitimate Input Tax Credit (ITC). * **Petitioner's Action:** The petitioner made representations to the GST authorities to allow them to correct this error, but the request was not considered, compelling them to file a writ petition. #### **4. Arguments** **Petitioner's Arguments:** * The error in GSTR-1 was a genuine and inadvertent oversight. * The mistake has caused undue hardship to their customer (Respondent No. 6), who is unable to claim ITC despite the petitioner having paid the tax to the government. * The authorities should allow rectification of such bona fide errors to ensure that substantive benefits are not denied due to procedural lapses. * The petitioner relied on Circular No. 183/15/2022-GST dated 27.12.2022 and several High Court judgments which have consistently permitted rectification of such errors beyond the statutory timelines. **Respondents' (Revenue's) Arguments:** * The primary contention was that Circular No. 183/15/2022-GST, relied upon by the petitioner, is explicitly restricted to the financial years 2017-18 and 2018-19. * Since the error pertains to the financial year 2020-21, the said circular is not applicable. * Consequently, the petition lacks merit and should be dismissed as there is no provision to allow rectification after the time limit has lapsed. #### **5. Court’s Reasoning** * The Court adopted a justice-oriented approach, emphasizing that a taxpayer should not be prejudiced due to inadvertent human errors, especially when there is no loss of revenue to the exchequer. * It relied heavily on judicial precedents set by various High Courts, including its own decision in the *Wipro Limited* case, where the benefit of Circular No. 183/15/2022-GST was extended to the financial year 2019-20. The Court implicitly extended the same logic to the year 2020-21. * The common principle running through the cited judgments (*Star Engineers, Sun Dye Chem, Railroad Logistics*, etc.) is that procedural time limits should not defeat the substantive right to claim ITC, especially when the mistake is bona fide and the GST regime's electronic framework is still evolving. * The Court observed that allowing the rectification would ensure the accuracy of GST records, prevent undue hardship to the recipient, and avoid unnecessary litigation, aligning with the overall objective of the GST law. The denial of rectification would be unjust and would penalize the petitioner for a mistake that does not result in any revenue loss. #### **6. Statutory References** * **Constitution of India:** Articles 226 & 227 * **Central Goods and Services Tax (CGST) Act, 2017:** * **Section 16(4):** Prescribes the time limit for availing Input Tax Credit. * **Section 37:** Pertains to the furnishing of details of outward supplies (Form GSTR-1). * **Circulars:** * **Circular No. 183/15/2022-GST dated 27.12.2022:** Clarifies the procedure to deal with differences in ITC availed in GSTR-3B compared to GSTR-2A for FY 2017-18 and 2018-19. #### **7. Precedents Cited** The Court referred to a consistent line of judgments from various High Courts, including: 1. *M/s. Sun Dye Chem Vs. The Assistant Commissioner (ST)* (Madras High Court) 2. *Pentacle Plant Machineries Pvt. Ltd., Vs. Office of the GST Council* (Madras High Court) 3. *Wipro Limited Vs. Assistant Commissioner of Central Taxes* (Karnataka High Court) 4. *M/s. Railroad Logistics (India) Pvt. Ltd., Vs. The Union of India* (Bombay High Court) 5. *Star Engineers (I) Pvt. Ltd., Vs. Union of India* (Bombay High Court) 6. *M/s. Shiva Jyoti Construction Vs. The Chairperson, Central Board of Excise & Customs* (Orissa High Court) 7. *M/s. Mahalaxmi Infra Contract Ltd., Vs. Goods and Services Tax Council* (Jharkhand High Court) 8. *M/s. Y.B. Constructions Pvt. Ltd., Vs. Union of India* (Orissa High Court) 9. *M/s. Mahle Anand Termal Systems Pvt. Ltd., Vs. Union of India* (Bombay High Court) 10. *Screenotex Engineers Pvt. Ltd., Vs. Commissioner of CGST* (Gujarat High Court)

Of course. As a Senior GST Legal Analyst, here is a structured summary of the judgment in *Heramba Narayan Panda vs The Commissioner Cgst & Cx*. *** ### **Summary of Judgment: Heramba Narayan Panda vs The Commissioner Cgst & Cx** #### **1. Outcome** The High Court disposed of the writ petition by directing the adjudicating authority (Superintendent, Central GST & Central Excise, Jajpur Range-III) to consider and dispose of the petitioner's pending application for rectification. This must be done within three weeks, in accordance with the law, after providing the petitioner an opportunity for a personal hearing. The Court remanded the matter for fresh consideration in light of a recent retrospective legislative amendment. #### **2. Core Issue** The central issue was whether the petitioner could avail the benefit of a retrospective amendment to Section 16 of the CGST Act, 2017, which extended the time limit for claiming Input Tax Credit (ITC) for the financial year 2018-19, even though an adverse order under Section 73 had already been passed disallowing such credit. #### **3. Key Facts** * **Adverse Order:** An Order-in-Original dated 23.04.2024 was passed against the petitioner under Section 73 of the GST Act for the tax period April 2018 to March 2019. It confirmed a demand of Rs. 6,58,980/- for availing ITC after the statutory due date prescribed under Section 16(4). * **Legislative Amendment:** The Finance (No.2) Act, 2024, inserted a new sub-section (5) to Section 16 of the CGST Act with retrospective effect from 01.07.2017. This amendment allowed taxpayers to claim ITC for FY 2017-18 to 2020-21 in any return filed up to 30th November 2021. * **Rectification Procedure:** Following the amendment, the CBIC issued a notification (15.10.2024) and a circular (15.10.2024) establishing a special procedure for taxpayers to apply for rectification of orders that had disallowed ITC on these grounds. * **Petitioner's Action:** The petitioner attempted to file a rectification application on the GST portal but faced technical glitches. Consequently, they submitted the application via registered post, which was acknowledged by the department on 14.02.2025. * **Inaction by Authority:** The authority did not act on the pending rectification application, prompting the petitioner to approach the High Court. #### **4. Arguments** * **Petitioner's Counsel (Ms. Kananbala Roy Choudhury):** * The demand was a technical one, arising from the late filing of GSTR-3B. * The newly inserted Section 16(5) of the CGST Act, being retrospective, regularizes the ITC availed by the petitioner and nullifies the basis of the impugned order. * The government has provided a specific mechanism (rectification) to give effect to this amendment, which the petitioner has duly followed. * The authority's failure to process the rectification application is denying the petitioner a statutory benefit. * **Respondent's Counsel (Mr. Avinash Kedia):** * The counsel made a procedural concession, agreeing that if the petitioner's rectification application is pending, the authority can be directed by the Court to dispose of it in accordance with the law. #### **5. Court’s Reasoning** * The Court acknowledged that the basis of the original demand (disallowance of ITC under Section 16(4)) was directly addressed by the retrospective insertion of Section 16(5). * It noted that the government had created a specific pathway via notification and circular for taxpayers to seek rectification of past orders affected by this amendment. * The Court observed that the petitioner’s rectification application, filed on 14.02.2025, was pending before the authority. * Rather than adjudicating on the merits of the petitioner's eligibility under the new law, the Court deemed it appropriate to direct the adjudicating authority to perform its statutory duty. * The Court reasoned that the authority is the proper forum for the initial "fresh consideration" of the claim in light of the new legal provisions, subject to the petitioner meeting all other stipulated conditions. * Therefore, the most expedient course of action was to remand the matter to the authority with a time-bound direction to decide on the pending application. #### **6. Statutory References** * **Acts:** * Central Goods and Services Act, 2017 (CGST Act) * Odisha Goods and Services Act, 2017 (OGST Act) * Finance (No.2) Act, 2024 * **Sections of GST Act:** * **Section 16(4):** Time limit for availing ITC. * **Section 16(5):** Newly inserted retrospective provision extending the time limit for ITC for FYs 2017-18 to 2020-21. * **Section 39:** Furnishing of returns. * **Section 73:** Determination of tax for non-fraud cases. * **Section 74:** Determination of tax for fraud cases. * **Section 107:** Appeals to Appellate Authority. * **Section 108:** Powers of Revisional Authority. * **Section 148:** Power to notify special procedures. * **Other References:** * Notification No. CBIC-20006/20/2023-GST, dated 15.10.2024. * Circular No. F. No. CBIC-20001/6/2024-GST, dated 15.10.2024. #### **7. Precedents Cited** The petitioner's counsel referred to the following judgments: 1. *Shiv Construction Company vs. Additional Commissioner*, (2025) 27 Centax 239 (Guj.) 2. *Adhiraj Distributors Ltd. vs. Additional Commissioner of Revenue*, (2025) 31 Centax 391 (Cal.) 3. *Med Biogenex Pvt. Ltd. vs. Superintendent, Central Goods & Services Tax & Central Excise*, (2025) 28 Centax 357 (Cal.)

Of course. As a Senior GST Legal Analyst, here is a structured summary of the judgment in *Karibasappa Durgappa Hadagali vs The Additional Commissioner*. *** ### **Judgment Summary** **1. Outcome** The Writ Petition was allowed in part. The High Court quashed the Order-in-Appeal (dated 29-03-2025) and the underlying Adjudication Order (dated 07-12-2023). The matter was remanded back to the adjudicating authority for a fresh decision. The petitioner was granted four weeks to submit a reply to the original show-cause notice, and the authorities were directed to pass a new order in accordance with the law, specifically considering the principles laid down in CBIC Circular No. 183/15/2022-GST and a binding precedent. **2. Core Issue** The central issue is whether the GST authorities can deny relief to a taxpayer for bonafide errors made in GSTR-1 filings during the initial GST period (FY 2017-18 and 2018-19), which led to discrepancies in Input Tax Credit (ITC) between FORM GSTR-3B and FORM GSTR-2A. The Court examined if such cases should be adjudicated based on the clarificatory procedure outlined in CBIC Circular No. 183/15/2022-GST. **3. Key Facts** * The petitioner, a proprietor of M/s Nandi Steels, was aggrieved by an Adjudication Order passed by the Superintendent of Central Tax, which was subsequently upheld by the Additional Commissioner in an Order-in-Appeal. * The petitioner challenged both these orders before the Karnataka High Court. * The root cause of the dispute, as inferred from the precedent cited, was likely a mismatch in ITC due to reporting errors in GST returns. * The petitioner contended that the issue was no longer open for debate and was settled by a previous High Court judgment. **4. Arguments** * **Petitioner's Counsel (Sri. S. G. Solargoppa):** The petitioner's primary argument was that the issue in the present case is squarely covered by a judgment of a Co-ordinate Bench of the Karnataka High Court in *Writ Petition No. 16175/2022*. That judgment had directed the GST authorities to apply the beneficial provisions of CBIC Circular No. 183/15/2022-GST to rectify bonafide errors in GSTR-1 returns, such as mentioning the wrong recipient GSTIN. * **Respondents' Counsel:** The notice to the respondents was dispensed with, so no arguments were presented on their behalf. The Court proceeded based on the petitioner's submissions. **5. Court’s Reasoning** * The Court found merit in the petitioner's argument that the legal issue was already settled by a binding precedent from a Co-ordinate Bench. * The Court relied entirely on the reasoning provided in the cited judgment (*W.P. No. 16175/2022*), which held that CBIC Circular No. 183/15/2022-GST was issued specifically to address genuine discrepancies in ITC for FY 2017-18 and 2018-19 arising from bonafide reporting errors. * The precedent established that mistakes like entering an incorrect GSTIN of the recipient are bonafide errors, and the taxpayer should be given an opportunity to rectify them as per the procedure prescribed in the circular. * Applying the principle of judicial consistency, the Court concluded that the lower authorities had erred by not considering the matter in light of the circular and the established legal position. * Consequently, the Court quashed the impugned orders to ensure procedural fairness and directed a fresh adjudication from the stage of the show-cause notice, with a clear instruction to consider the precedent and the circular. **6. Statutory References** * **Constitution of India:** Articles 226 & 227 * **Central Goods and Services Tax (CGST) Act, 2017:** * **Section 16:** Eligibility and conditions for taking Input Tax Credit. * **Section 16(4):** Time limit for availing ITC. * **Section 168(1):** Power of the CBIC to issue instructions and directions. * **GST Forms:** GSTR-1, GSTR-2A, GSTR-3B. **7. Precedents Cited** * **Judicial Precedent:** Judgment of the Co-ordinate Bench of the Karnataka High Court in **Writ Petition No. 16175/2022**, disposed of on 06th January 2023. * **Administrative Clarification:** **CBIC Circular No. 183/15/2022-GST dated 27.12.2022**, which provides a procedure for handling discrepancies between ITC availed in FORM GSTR-3B and that available in FORM GSTR-2A for FY 2017-18 and 2018-19.

Of course. As a Senior GST Legal Analyst, here is a structured summary of the judgment in M/S Bathla Telectech Pvt. Ltd vs The State Of Bihar. *** ### **Judgment Summary** **Case Title:** M/S Bathla Telectech Pvt. Ltd vs The State Of Bihar & Others (Lead case: M/s Utkrisht Trade Solutions Pvt. Ltd. vs. The State of Bihar and Others) **Date of Judgment:** 11 April, 2025 **Bench:** Hon’ble Mr. Justice P. B. Bajanthri and Hon’ble Mr. Justice Alok Kumar Sinha --- #### **1. Outcome** The writ petitions were allowed. The impugned orders passed by the Deputy Commissioner of State Tax (Adjudicating Authority) and the Additional Commissioner of State Tax (Appellate Authority), which had rejected the petitioners' claims for Input Tax Credit (ITC), were **set aside**. The matter was **remanded** back to the Deputy Commissioner of State Tax for a fresh examination. The authority was directed to specifically verify the petitioners' compliance with Section 16(2)(b) of the CGST Act by examining documentary evidence of the business arrangement (e.g., MOU/agreement) between the petitioners (dealers) and their suppliers for the direct delivery of goods to the end consumers. The entire exercise is to be completed within six months. #### **2. Core Issue** The central legal question before the High Court was whether the physical receipt of goods by a registered person (the dealer) at their premises is a mandatory pre-condition for claiming Input Tax Credit (ITC) under Section 16(2)(b) of the CGST/BGST Act, 2017. Specifically, the Court examined the validity of denying ITC in a business model where the dealer instructs the supplier to ship goods directly to the end customer, and the dealer itself never takes physical delivery of the goods. #### **3. Key Facts** * The petitioners are registered dealers who claimed ITC on their purchases for various tax periods. Their business model involved purchasing goods from a supplier and then instructing that supplier to deliver the goods directly to the end consumer, bypassing delivery to the petitioners' own premises. * The GST authorities initiated proceedings against the petitioners, primarily on the grounds that the entire output tax liability was being discharged through ITC. * The Adjudicating Authority disallowed the ITC claims, holding that the petitioners had not fulfilled the condition under Section 16(2)(b) of the CGST Act, as there was no evidence of actual physical receipt of goods by them. * The petitioners' appeals were dismissed by the Appellate Authority, which upheld the original orders. * Aggrieved by these concurrent findings, the petitioners filed writ petitions before the Patna High Court. #### **4. Arguments** **Petitioner's Contentions:** * They fulfilled all conditions for claiming ITC under Section 16, including possession of tax invoices and proof of tax payment by their suppliers to the government. * The term "received the goods" in Section 16(2)(b) does not necessitate physical receipt. The **Explanation to Section 16(2)(b)** creates a legal fiction of "deemed receipt" for business models like 'bill to ship to', where goods are delivered to a third party on the direction of the registered person. * This business model is adopted to enhance logistical efficiency and is a common commercial practice. * The precedents cited by the Revenue authorities were distinguishable: *Aastha Enterprises* dealt with a situation where the supplier had not paid tax to the government, which is not the case here. *State of Karnataka vs. M/s Ecom Gill* was about the burden of proving the genuineness of a transaction, not the interpretation of "deemed receipt". **Respondent's (State's) Contentions:** * Section 16(2)(b) read with Section 31 (Tax Invoice) mandates the actual movement of goods from the supplier to the dealer for ITC eligibility. * The burden of proving the correctness of the ITC claim, as per Section 155 of the CGST Act, lies squarely on the assessee. * Mere production of invoices is insufficient; the dealer must prove the actual transaction with evidence like vehicle details, freight payment proof, and delivery acknowledgments. * The 'deemed receipt' provision is not applicable as the petitioners failed to prove a formal 'bill to ship to' arrangement with proper documentation like a work contract or agreement. #### **5. Court’s Reasoning** * **Interpretation of "Deemed Receipt":** The Court heavily relied on the **Explanation to Section 16(2)(b)** of the CGST Act. It reasoned that the legislature consciously included this provision to recognize modern commercial practices. This Explanation creates a "deeming fiction" where a registered person is considered to have received goods if they are delivered to any other person on their direction. * **Physical Receipt Not Mandatory:** The Court held that the CGST Act marks a departure from earlier laws (like Central Excise) and does not mandate physical receipt of goods at the registered person's specific location as the sole criterion for ITC eligibility. The concept of "deemed receipt" is legally sufficient. * **Non-Application of Mind by Authorities:** The Court found that both the Adjudicating and Appellate authorities failed to apply their minds to the legal effect of the Explanation to Section 16(2)(b). They rejected the ITC claims on the singular ground of non-physical receipt without examining the petitioners' business model and supporting documents. * **Distinguishing Precedents:** The Court agreed with the petitioners that the cases cited by the Revenue were not applicable to the facts at hand. The primary issue in the present case was the legal interpretation of "receipt of goods," not the non-payment of tax by the supplier or a complete failure to prove the transaction. * **Need for Fresh Examination:** While upholding the legal principle of "deemed receipt," the Court noted that the genuineness of the arrangement must be verified. Therefore, it remanded the matter for a factual verification of the documents proving the arrangement, such as agreements/MOUs between the supplier and the dealer and the instructions for direct delivery to the end consumer. #### **6. Statutory References** * **Central Goods and Services Tax Act, 2017 (CGST Act):** * **Section 16:** Eligibility and conditions for taking Input Tax Credit (specifically Sec 16(1) and 16(2)(b) with its Explanation). * **Section 17:** Apportionment of credit and blocked credits. * **Section 31:** Tax Invoice. * **Section 35:** Accounts and other records. * **Sections 73 & 74:** Determination of tax. * **Section 79:** Recovery of tax. * **Section 107:** Appeals to Appellate Authority. * **Section 155:** Burden of proof. * **Central Goods and Services Tax Rules, 2017:** * **Rule 36:** Documentary requirements for claiming ITC. #### **7. Precedents Cited** * **Cited by the Revenue/Authorities:** 1. *Aastha Enterprises vs. The State of Bihar and Another* (CWJC No. 10359 of 2023) 2. *State of Karnataka vs. M/s Ecom Gill Trading Private Limited* (2023 SCC OnLine SC 248) 3. *SAJ Food Products Pvt. Ltd vs. The State of Bihar and Others* (CWJC No. 15465 of 2022) * **Cited by the Petitioner (including Circulars):** 1. Circular No. 241/35/2024-GST dated 31.12.2024 2. Circular No. 61/35/2018-GST dated 04.09.2018 3. Circular No. 3/1/2018-IGST dated 25.05.2018

Of course. As a Senior GST Legal Analyst, here is a structured summary of the judgment in *M/S Bathla Teletech Pvt Ltd vs The State Of Bihar*. *** ### **Judgment Summary** **Case:** M/S Bathla Teletech Pvt Ltd vs The State Of Bihar (Lead Case: M/s Utkrisht Trade Solutions Pvt. Ltd. vs The State of Bihar) **Court:** High Court of Judicature at Patna **Date of Judgment:** April 11, 2025 --- #### **1. Outcome** The writ petitions were **allowed**. The impugned orders passed by the Adjudicating Authority and the Appellate Authority, which denied Input Tax Credit (ITC) to the petitioners, were **set aside**. The matter was **remanded** back to the Deputy Commissioner of State Tax for a fresh adjudication. The authority was directed to re-examine the petitioner's ITC claim based on the correct interpretation of the law, specifically focusing on documentary evidence of the "bill to ship to" transaction model, and to pass a fresh order within six months. #### **2. Core Issue** The central legal question was whether a registered person (the dealer) must physically receive goods to be eligible for Input Tax Credit under Section 16(2)(b) of the CGST/BGST Act, 2017. Specifically, the Court examined if "deemed receipt" of goods, as contemplated in the Explanation to Section 16(2)(b), is sufficient. This applies to business models where the dealer instructs the supplier to deliver goods directly to the end customer (a "bill to ship to" model) without the goods physically reaching the dealer's premises. #### **3. Key Facts** * The petitioners are registered dealers who claimed ITC on goods purchased from suppliers for onward sale. * Their business model involved purchasing goods and instructing the original supplier to ship them directly to the end customer to save on logistics costs and time. * The GST authorities initiated proceedings, alleging that since the petitioners never physically received the goods, they failed to satisfy the condition under Section 16(2)(b) of the CGST Act. * The Adjudicating Authority disallowed the ITC claim, and this decision was upheld by the first Appellate Authority, leading to the present writ petitions before the High Court. * It was not disputed by the Revenue that the petitioners had paid the tax to their suppliers, and the suppliers had, in turn, deposited this tax with the Government. #### **4. Arguments** **Petitioner's Arguments:** * They fulfilled all conditions for claiming ITC under Section 16, including payment of tax to the supplier, who remitted it to the government. * The "receipt of goods" under Section 16(2)(b) does not necessarily mean physical receipt. The **Explanation to Section 16(2)(b)** creates a legal fiction where a registered person is *deemed* to have received the goods if they are delivered to any other person on their direction. * Their "bill to ship to" model is a standard, efficient business practice explicitly covered by this deeming provision. * The precedents relied upon by the department were distinguishable: * *Aastha Enterprises*: In that case, the supplier had defaulted on tax payment, which is not the situation here. * *State of Karnataka vs. M/s Ecom Gill Trading*: This case dealt with the burden of proof under the VAT regime and did not interpret the specific deeming provision under the GST law. **Respondent's (State's) Arguments:** * Physical receipt of goods is a mandatory precondition for claiming ITC under Section 16(2)(b). * The transactions were merely "paper transactions" without the actual movement of goods to the petitioner. * The burden of proving the correctness of the ITC claim, including the actual transaction and movement of goods, lies entirely on the assessee, as established in *M/s Ecom Gill Trading*. * The petitioner failed to provide sufficient documentary proof like an agreement/MOU for such a "bill to ship to" arrangement. #### **5. Court’s Reasoning** * The Court held that the interpretation of "receipt of goods" by the tax authorities was overly restrictive and legally incorrect. * It emphasized the **Explanation to Section 16(2)(b) of the CGST Act**, which explicitly creates a "deemed receipt" scenario. This provision clarifies that if a supplier delivers goods to a third party on the direction of the registered person (the buyer), the registered person is considered to have received the goods. * The Court noted that the GST law marks a departure from previous tax regimes (like Central Excise) where physical receipt at the registered premises was often mandatory. The concept of "deemed receipt" is designed to facilitate modern business practices like "bill to ship to". * The authorities below failed to apply their minds to this crucial legal provision and instead rejected the claim mechanically on the sole ground of non-physical receipt. * The Court distinguished the precedents cited by the Revenue, finding them inapplicable to the facts and the specific legal provision in question. * Since the foundational reason for denial was legally flawed, the Court remanded the matter. It directed the authority to freshly examine the transactions, not on the basis of physical receipt, but by verifying the documentary evidence proving the "bill to ship to" arrangement (e.g., contracts, purchase orders, invoices, delivery instructions, and proof of delivery to the end customer). #### **6. Statutory References** * **Central Goods and Services Tax Act, 2017 (CGST Act):** * **Section 16(2)(b) & its Explanation:** Condition for ITC that the registered person has "received the goods or services or both". * Section 31: Tax Invoice. * Section 35: Accounts and other records. * Section 73: Determination of tax. * Section 107: Appeals. * Section 155: Burden of proof. * **Bihar Goods and Services Tax Act, 2017 (BGST Act):** Corresponding provisions. * **Central Goods and Services Tax Rules, 2017 (CGST Rules):** Rule 36. #### **7. Precedents Cited** * **Aastha Enterprises vs. The State of Bihar** (CWJC No. 10359 of 2023): Distinguished by the Court on the fact that the supplier in that case had not paid tax to the government. * **State of Karnataka vs. M/s Ecom Gill Trading Private Limited** (2023 SCC OnLine SC 248): Distinguished as it pertained to the burden of proof under the KVAT Act and did not deal with the "deemed receipt" provision under the CGST Act. * **SAJ Food Products Pvt. Ltd vs. The State of Bihar** (CWJC No. 15465 of 2022): Noted but found not directly relevant to the core issue of deemed receipt.

Of course. As a Senior GST Legal Analyst, here is a structured summary of the judgment in M/S Bathla Teletech Pvt. Ltd vs The State Of Bihar. This judgment addresses a group of similar writ petitions, with CWJC No. 17914 of 2023 (M/s Utkrisht Trade Solutions Pvt. Ltd.) treated as the lead case. *** ### **Judgment Summary** **1. Outcome** The writ petitions were **allowed**. The impugned orders passed by the Adjudicating Authority (Deputy Commissioner of State Tax) and the Appellate Authority (Additional Commissioner of State Tax), which had denied Input Tax Credit (ITC) to the petitioners, were **set aside**. The matter was **remanded** back to the Deputy Commissioner of State Tax for a fresh adjudication with specific directions. **2. Core Issue** The central legal question before the Court was whether a registered person is entitled to claim Input Tax Credit (ITC) under Section 16(2)(b) of the CGST/BGST Act, 2017, when the goods are delivered directly by the supplier to the end consumer on the registered person's direction, without the goods being physically received at the registered person's premises. In essence, the issue is whether the condition "he has received the goods" under Section 16(2)(b) necessitates physical receipt by the claimant, or if the "deemed receipt" provision under the Explanation to the clause is sufficient. **3. Key Facts** * The petitioners are registered dealers who claimed ITC on their inward supplies for various tax periods. * Their business model involves purchasing goods from a supplier and instructing the supplier to ship the goods directly to the end customer. This is commonly known as a "bill to, ship to" model. * The GST authorities initiated proceedings, alleging that since the petitioners did not physically receive the goods at their place of business, they failed to satisfy the condition under Section 16(2)(b) of the CGST/BGST Act. * The Adjudicating Authority denied the ITC claims solely on the ground of non-receipt of goods. * The petitioners' appeals were dismissed by the First Appellate Authority, which upheld the original orders. * Aggrieved by these concurrent findings, the petitioners filed writ petitions before the High Court. **4. Arguments** * **Petitioner's Arguments:** * The petitioners contended that they fulfilled all substantive conditions for availing ITC under Section 16, including being in possession of tax invoices and ensuring that the supplier had paid the tax to the government. * They argued that the term "received the goods" in Section 16(2)(b) must be read along with the **Explanation** to that clause. * The Explanation creates a legal fiction of "deemed receipt" where goods are delivered to a third party on the direction of the registered person. Their business model falls squarely within this Explanation. * The requirement of physical receipt is archaic and does not align with modern business practices, which the GST law accommodates through the deeming provision. * The precedents relied upon by the department were distinguishable, as they either pertained to cases where the supplier had defaulted in paying tax (*Aastha Enterprises*) or dealt with the general burden of proof under a different statute without interpreting the specific deeming provision of Section 16(2)(b) (*State of Karnataka vs. M/s Ecom Gill*). * **Respondent's (State's) Arguments:** * The State argued that the physical movement and receipt of goods by the dealer are mandatory for claiming ITC, as implied by Section 16(2)(b) read with Section 31 (Tax Invoice). * They placed heavy reliance on the principle that the burden of proof to substantiate an ITC claim lies on the assessee under Section 155 of the CGST Act. * They contended that in the absence of evidence of physical receipt, the transactions were merely on paper, and the ITC claim was not genuine. **5. Court’s Reasoning** * The Court held that the authorities had interpreted Section 16(2)(b) in an overly restrictive and erroneous manner by ignoring the **Explanation** appended to it. * It clarified that the Explanation to Section 16(2)(b) explicitly creates a "deeming fiction". When goods are delivered by a supplier to any other person (the end consumer) on the direction of the registered person (the petitioner), the registered person is *deemed* to have received the goods. * The Court observed that physical possession is not the sole criterion for determining receipt under the CGST Act. The law specifically accommodates business models like "bill to, ship to" to facilitate trade and avoid unnecessary logistical costs. * The authorities failed to apply their minds to the documents and evidence submitted by the petitioners to prove the existence of such a business model (e.g., agreements, purchase orders, delivery instructions). Their denial of ITC was based on a flawed premise that physical receipt was non-negotiable. * The Court distinguished the precedents cited by the State, finding them inapplicable to the specific legal issue at hand. * Consequently, the Court concluded that the matter required fresh consideration by the Adjudicating Authority, with a specific direction to examine the transactions in light of the correct legal interpretation of Section 16(2)(b) and its Explanation. The authority was directed to verify the documentary evidence proving the "bill to, ship to" arrangement. **6. Statutory References** * **Central Goods and Services Tax Act, 2017 (CGST Act):** * **Section 16(2)(b) & its Explanation:** Core provision regarding the condition of receipt of goods for ITC eligibility. * Section 16(1): General eligibility for ITC. * Section 31: Tax Invoice. * Section 35: Accounts and other records. * Section 73: Determination of tax in non-fraud cases. * Section 107: Appeals to Appellate Authority. * Section 155: Burden of proof. * **Circulars:** * Circular No. 241/35/2024-GST dated 31.12.2024. **7. Precedents Cited** * *Aastha Enterprises vs. The State of Bihar and Another* (CWJC No. 10359 of 2023) - Distinguished by the Court. * *State of Karnataka vs. M/s Ecom Gill Trading Private Limited* (2023 SCC OnLine SC 248) - Distinguished by the Court. * *SAJ Food Products Pvt. Ltd vs. The State of Bihar and Others* (CWJC No. 15465 of 2022) - Distinguished by the Court.