Proceedings against Supplier and Recipient for non payment of tax

[Prakash and Thiagarajan]

Dear All,

During investigation, amounts were recovered from the recipient as ineligible ITC for the reason the supplier had not paid the taxes. Later, proceedings were initiated against the supplier and order passed confirming the demand towards non-payment of tax which covers the above transaction related to ineligible ITC. 

SCN is now issued on the recipient to appropriate the recovery made during investigation. Are there decisions which prohibits issuance of SCN on the recipient when the proceedings are already concluded against the supplier for the same issue (GST/VAT). 

Thanks. 

AI Summary

GST proceedings: authorities should pursue supplier first; recipient action allowed only in exceptional circumstances per rulings.
Authorities should pursue supplier proceedings first where ineligible input tax credit arises from supplier non-payment; initiation of proceedings against the recipient is permissible only in exceptional circumstances, and departmental recovery should ordinarily be from the supplier, with the principle against unjust enrichment informing allocation.