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

Input Tax Credit ineligibility: supplier's unpaid tax may trigger reversal and demand under anti-evasion provisions.
Department issued a show cause notice seeking reversal of input tax credit with interest and penalty because the supplier neither filed returns nor paid tax; legal principle cited is that ITC is not allowable unless tax has been actually paid to the government, and administrative guidance for the years in question supports that requirement; insolvency of the supplier complicates relief but does not automatically prevent departmental recovery, so contesting the demand through appeals or courts may be necessary.