Entitlement of ITC in case of failure of payment of Tax by the vendor
High Court of Madras in the case of Sri Ranganathar Valves Pvt Ltd Vs Assistant Commissioner (CT) (FAC) 2020-TIOL-1611-HC-MAD-VAT held that ITC claim by an assessee cannot be denied because the dealers from whom the assessee made purchases, did not paid taxes in treasury by following the landmark judgment in case of Thiruverkadu Assessment Circle, Kolathur, Chennai Vs. Infiniti Wholesale Ltd. [2017] 99 VST 341 (Mad).
This is under VAT regime but should be applied to the GST regime also. If ITC is denied because vendor has not deposited tax in treasury violates fundmental right of free trade across India because the purchaser has no control over the vendor to ensure deposit of tax in treasury.
