Facts of the case: In Tirupati Balaji Traders v. Union of India (Kerala High Court, July 24, 2024, W.P. (C) No. 16259 of 2024), the petitioner, a purchasing dealer, paid the full tax amount to the supplier but was denied Input Tax Credit (ITC) because the supplier had not remitted the tax to the government.

Issue raised: The central issue was whether the purchasing dealer could claim ITC under Section 16(2)(c) of the CGST Act despite paying the tax to the supplier when the supplier failed to remit the tax to the government.

Applicant’s contentions: The petitioner argued that denying ITC in such situations contradicts the provisions of the CGST/SGST Acts.

Legal provisions involved: As per Section 16(2)(c) of the CGST Act, ITC can only be claimed if the tax paid by the recipient has been remitted to the government by the supplier.

Conclusion: The Kerala High Court held that ITC under the CGST/SGST framework is a conditional benefit, The Court emphasized that ITC is not an absolute right but a concession subject to specific conditions.

The Court dismissed the petition and clarified that ITC is contingent on the actual deposit of tax with the government.