TaxTMI 
TaxTMI 
TaxTMI 
How to overcome Section 16 (2) (C) issues under GST Law
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....ow to overcome Section 16 (2) (C) issues under GST Law<br>By: - K Balasubramanian<br>Goods and Services Tax - GST<br>Dated:- 20-1-2026<br>The concept of making the buyer responsible for the default of the seller is not an invention in GST Law but the same was borrowed from DELHI VAT. It is a settled issue under DVAT laws that such concept does not work as a genuine buyer who has already paid ap....
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....plicable taxes to the seller should not be penalized. Despite adverse comments on this section by almost all jurisdictional high courts in India, CBIC/GST Council is not willing to listen. This attitude of the top authority on GST prompt adjudication officers/ First appellate authorities to travel beyond legal provisions to ensure that a genuine ITC is denied with the sole objective o....
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....n improving the tax collection which is totally and fundamentally against the principles of seamless flow of ITC. Is the Government, which is so harsh on the genuine buyer, will leave the seller free when he does not pay the legally collected taxes to Government in line with the provisions of the law?. If tax is not collected from the buyer, one may quote working capital issues as a reason for no....
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....n- payment of GST whereas a tax, which is collected by the seller from the buyer on behalf of the Government, if not paid in time is a serious offence. Is the Government a silent spectator on these cases?. As we have been observing the developments arising out of Supreme Court verdict like the one in Safari Retreats case, even when the Supreme Court passes an adverse order on 16 (2) (c) as and wh....
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....en the matter reaches there, there is no point in waiting for CBIC or GST Counsil to take any action on this issue as the Government may go for an amendment with retrospective effect from 01/07/2017 itself. The only solution to manage GST issues on buyers is with the sellers. All business to business transactions taking place allover India must be governed by a contract clause that stipulates tha....
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....t the portion pertaining to supplies shall be paid to the supplier as per agreed terms on payment whereas the applicable GST is payable only when the supplier includes the transaction in GSTR 3B of the respective month. Trade should fall in line on this stipulation, even where the market is dictated by seller as this is the one and only viable option amongst all taxpayers to mitigate the serious ....
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....lacuna in section 16. The seller must invariably agree for this as he happens to be a buyer for someone else. By slowly spreading this message amongst all concerned with GST, we achieve a lot in terms of reduction in litigation as well as we may focus on better things in business. The Government has openly admitted the inefficiency to collect the GST from supplier who are fraudu....
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....lent persons and at the same time show their high handedness on a poor and genuine receiver in all cases where ITC is held ineligible. The recent judgement 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.....
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.... Sentu Dey, Represented by its Proprietor Sri Sentu Dey, Bairagi Bazar, Jumerdhepha. - 2026 (1) TMI 385 - TRIPURA HIGH COURT triggered me to write this article as this is a landmark decision having huge impact on all future cases likely to reach GSTAT in the near future. Section 16 (2) (c) has already seen two amendments so far and the law is clear as provided under section 41 that as ....
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....and when the applicable GST is paid by the seller to the Government, the same is available as ITC to the buyer, which is rarely exercised by the buyer as he is unaware as to whether the applicable GST has been paid by the seller to the Government or not. As this is a tricky issue when the seller do not cooperate with the buyer, the Government in all possibilities is collecting the GST....
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.... twice as how we can expect the officer who is so harsh on a genuine buyer to be lenient with the defaulting seller?. It may be conclude that there is no point in waiting for the Government to listen on our genuine issues but we may proceed to find a practical solution to this issue. Accordingly, as regular suppliers do not create any issues, contract terms on other suppliers may be strengthened ....
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....to stipulate that GST portion on supply is payable only after the applicable ITC is duly reflected in GSTR 3B of the seller.<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....