Supplier tax-payment condition for input tax credit applies to bona fide purchasers, with credit re-availment after liability discharge.

Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 requires the supplier to pay tax before a purchasing dealer may avail input tax credit, including where the purchaser is bona fide. The GST input tax credit framework materially differs from the Delhi VAT regime and does not permit parity with protections available to bona fide purchasers under that framework. The scheme permits reversal and later re-availment of credit once the supplier's tax liability is discharged, including through mechanisms for tax determination and recovery. The provision is described as constitutional and not requiring a reading down.

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Issues: Whether Section 16(2)(c) of the Central Goods and Services Tax Act, 2017, requiring payment of tax by the supplier for availment of input tax credit, is unconstitutional or liable to be read down where the purchasing dealer is bona fide.

Analysis: The statutory scheme governing input tax credit under the Central Goods and Services Tax Act, 2017 materially differs from that under the Delhi Value Added Tax Act, 2004; therefore, a purchasing dealer under the GST regime cannot claim parity with a bona fide purchasing dealer under the Delhi VAT framework where the supplier fails to remit tax. The scheme also provides for reversal and subsequent re-availment of input tax credit upon discharge of the supplier's tax liability, including through the mechanisms under Sections 41, 73 and 74.

Conclusion: Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 is constitutional and is not liable to be read down; the condition of supplier payment of tax for input tax credit applies against the purchasing dealer.

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