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New Indian Express

Payer can recover GST loss from supplier who failed to remit tax, rules Madras HC

He filed the petition in the court seeking action against Durai Seenivasan Udayar under Section 76 of the GST Act. The judge noted that the petitioner believed he was absolved of his liabilities since he had paid the tax to the supplier, and thus, if there was any failure on the part of the supplier, it was only for the GST Department to initiate appropriate legal action and recover the GST amount. But the GST Department could not be treated as an agent for collecting the tax from the supplier. Instead, the petitioner could have followed it up with the supplier to ensure proper remittance. The judge held that the right course of action available for the petitioner was to initiate recovery proceedings against the supplier. 'Of course, the petitioner can initiate proceedings against the supplier to the extent of loss incurred by him due to the reversal of the ITC by the department on the ground of non-remittance of GST by the supplier, by taking appropriate legal action for recovery of the amount,' the judge said. He noted that once the amount was remitted, the provisional credit available with the ECL of the petitioner would become absolute and made available for him to avail the ITC. Further, the judge observed that the petitioner could inform the first respondent (GST authorities) about the non-remittance of the tax amount by the supplier. However, it would be up to the authorities to initiate proceedings under Section 76 of the GST Act.