Constitutional validity of section 16(2)(c) of the CGST Act upheld, Gujarat High Court’s decision affirmed on supplier tax payment as a pre-condition for ITC – Supreme Court

In brief

In a recent significant ruling¹ , the Supreme Court dismissed the Special Leave Petitions (SLP) filed against the Gujarat High Court’s decision in the case of Maruti Enterprise² , thereby affirming the constitutional validity of section 16(2)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act). The Supreme Court agreed that the goods and services tax (GST) framework is fundamentally different from the erstwhile value-added tax (VAT) regime and upheld the requirement that input tax credit (ITC) be available to the recipient only where the supplier has actually paid the tax to the government. It also endorsed the Gujarat High Court’s view that section 16(2)(c) of the CGST Act neither warrants being declared unconstitutional nor does it require to be read down.