the supplier insolvent through NCLT and not paid GST in 2018-19

[Nagarajv]

My firm have purchased material from Panayam cements, Andhara Pradesh in 2018_2019.Panyam cements neither paid tax nor filed the respective GSTR-3B in respect of supplies made. In 2019 case was filed in NCLT amaravathi bench for insolvency of panayam cemnets. NCLT declares as insolvent in 2021. Now GST department is demanding reversal of ITC for the material which we have purchased during 2018-19 along with interest and penalty and issued show cause notice under section 74(1) of the KGST ACT 2017. Kindly advice how to get out of this.

 

AI Summary

Firm faces GST input tax credit reversal under Section 74(1) due to supplier's unpaid taxes and non-filing of returns A firm purchased materials from a supplier who was declared insolvent by the NCLT in 2021, with the supplier having neither paid GST nor filed returns for 2018-19. The GST department issued a show cause notice under section 74(1) of the KGST Act, 2017, demanding reversal of input tax credit (ITC) along with interest and penalty. The firm contends it was unaware of the supplier's non-compliance at the time of purchase and challenges the GST officer's refusal to acknowledge the insolvency order. Legal responses indicate that under Section 16(2)(c) of the CGST Act, ITC is only available if tax is paid to the government, and non-payment due to the supplier's failure to file returns justifies the demand. Courts have upheld such provisions, requiring action against the supplier. The firm may need to pursue judicial remedies as administrative authorities are unlikely to waive the demand despite the insolvency declaration.