TaxTMI 
TaxTMI 
TaxTMI 
1. As this happens to be my 101st one in TAXTMI.COM, I thank the team TMI for the encouragement given to me to write continuously. I dedicate this article on how not to pass an order (Adjudication) to all officers who pass adjudication orders under GST where the orders are reasoned one and well within the framework of GST Law, as in my considered view, GST Officers are expected to be more updated on current developments on GST matters.
2. This article is to re emphasis that a bona fide buyer should not be punished under section 16 (2) (c) of the CGST Act as held in M/s. Sahil Enterprises Versus Union of India, through its Secretary, Government of India, Ministry of Finance, Department of Revenue, New Delhi., Commissioner, Central Goods & Services Tax, Tripura Assistant Commissioner, Tripura M/s. Sentu Dey, Represented by its Proprietor Sri Sentu Dey, Bairagi Bazar, Jumerdhepha - 2026 (1) TMI 385 - TRIPURA HIGH COURT case. The high court of Tripura (Division Bench) on 10/02/2026 had an occasion to handle identical issue in the matter WP (C) 849 of 2022. The case is M/s. Malaya Rub-Tech Industries Versus The Union of India, The Secretary, Department of Finance, Government of India, New Delhi, The State of Tripura, The Commissioner & Secretary, Revenue Department, Government of Tripura, The Commissioner of Goods and Service Tax, Tripura, The Assistant Commissioner, Department of Revenue, CGST Tripura, Sri Sentu Dey. - 2026 (2) TMI 654 - TRIPURA HIGH COURT. The conclusion arrived by the high court must reach all officers passing orders in connection with 16 (2) (c) as the court observes that it is not a tool to punish honest buyers.
3. The period of dispute relates to 08/03/2018 to 30/11/2018. Show Cause notice was issued on 14/01/2021 raising a demand of 22,09,964 quoting the reason as seller has not paid the GST to Government. The SCN was duly replied with all required documents to prove the genuineness of the transactions on 29/12/2021.
4. As the state level officers all over India assume themselves to be above the law and pass whatever order they deem fit as right to show confirmation of huge demands, this officer also conformed full demand with interest vide order dated 17/02/2022.
5. Aggrieved, the taxpayer approached the jurisdictional high court for necessary remedy as any genuine buyer can not afford to loose a genuine ITC. It may be noted that this particular issue of supplier’s default is no more res integra since it has already attained finality, in the matter of Sahil enterprises as discussed in earlier articles.
6. The purpose of reiterating the same message is to make the tax officers aware of the fact that they are not going to collect any revenue by misusing section 16 (2) (c) as required awareness is available by this time and by stopping this wrong practice of punishing genuine buyers, orders stand the chance of getting affirmed when it reaches GSTAT.
7. GSTAT is a special fora headed by Supreme Court judge as President and shall be passing reasoned orders and shall have no hesitation to quash a wrong order. The tax officer must immediately realize that no useful purpose is solved when his order is set aside by GSTAT and it only brings him bad credentials as well as increases his workload on un-productive activity.
8. It may also be noted that once GSTAT is fully functional all over India, thousands of cases are likely to be filed against orders passed under 107, wherever the taxpayers are aggrieved.
9. The Tripura high court has made very valid observations and all taxpayers who reply an issue connected with supplier’s default may invariably attach the orders of Sahil Enterprises as well as this Malaya rub-tech Industries cases to strengthen your arguments. The adjudicating authority is duty bound to accept this order or must record reasons for deviation.
10. Relevant extracts from both the above cases are furnished to create awareness amongst all connected with the issue pertaining to supplier’s default.
11. Para 13. The show cause notice dt.14.01.2021 issued by the sixth respondent to the petitioner in the instant case, as well as the order passed on 17.02.2022 by the said officer, do not contain any findings therein that the transaction between the parties i.e. the petitioner and the seventh respondent, is not bona fide, or is a collusive, or a fraudulent transaction to defraud the revenue.
12. Para 15. Therefore, the ratio of the judgment in M/s Sahil Enterprises (1 supra) is clearly attracted, and the transaction between the parties i.e. the petitioner and the seventh respondent in the instant case, has to be held to be a bona fide transaction, and consequently for the failure of the seventh respondent to make over the tax collected by it from the petitioner, the petitioner cannot be punished by applying Section 16(2)(c) of the Act.
13. Para 16. Therefore, the Writ Petition is allowed, and the order dt.17.02.2022 passed by the sixth respondent is set aside, and the respondents are directed to forthwith allow the petitioner ITC to the extent of Rs.22,09,964/-. No costs.
14. Take Aways: The honey moon period enjoyed by the tax officials are over on 11/02/2026 itself. The Principal bench of the GSTAT ruled on 12/02/2026 in para 27 that In our considered view every honest taxpayer should be protected and if it is held, he has no intention of evading tax by submitting wrong data or misinformation or fraudulent misinformation having intend to evade tax then he should be given a proper hearing before saddling him with penalties and interest. In the ultimate analyses if a person has paid the tax and if it is accepted the taxes has been paid because of timeline, his argument is not heard, then he should be given another opportunity to argue his point of view.
15. It may be concluded that starting from the date on which this article is published, there are no adverse orders on genuine buyers for supplier’s default.