Supreme Court upholds validity of CGST Act Section 16(2)(c)

This case involves a group of petitions challenging the validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017, which denies Input Tax Credit (ITC) to buyers if the supplier has not paid the tax to the government. The Court examined whether this provision is arbitrary and violates constitutional provisions, specifically regarding bona fide purchasers who have no means to verify their supplier's tax payment.

Petitioners: Maruti Enterprise (through Jigneshbhai Bharatbhai Tarpara) and other grouped petitioners. Respondents: Union of India and State Authorities. Bench: Justice A.S. Supehia and Justice Pranav Trivedi of the High Court of Gujarat at Ahmedabad.

• The Court examined the vires (validity) of Section 16(2)(c) of the CGST Act, 2017.
• The Court clarified that the judgment is confined to the examination of the validity of the provision and did not examine the merits of individual matters.
• The Court noted that the petitioners argued the provision is arbitrary, ultra vires, and violative of Articles 14, 19(1)(g), 265, and 300A of the Constitution.
• The Court noted the petitioners' argument that the provision fails to distinguish between bona fide purchasers and those involved in fraudulent transactions.

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