ITC Amid Supplier Insolvency

In this case, the Madras High Court considered a challenge to a GST order denying input tax credit claimed by a construction firm. The department had confirmed tax, interest, and penalty on the ground that the supplier had not paid the corresponding GST. The petitioner argued that it had received valid invoices, made payments for the supplies, and that the supplier company had subsequently gone into liquidation before the NCLT, making it impossible for the petitioner to ensure tax compliance by the supplier. Rather than deciding the issue on merits, the Court held that the petitioner still had an effective statutory remedy of appeal under the GST law. The writ petition was therefore disposed of with liberty to file an appeal before the appellate authority upon payment of the mandatory 10 percent pre-deposit of disputed tax. The Court also clarified that any favourable order from the NCLT regarding the liquidation proceedings could be considered by the appellate authority while deciding the appeal.