Gst order HON’BLE Mr. JUSTICE KRISHNAN RAMASAMY W.P.No.28200 of 2025 Rajaratnam Sinna Naatchiappan

IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 04.08.2025
CORAM
THE HON’BLE Mr. JUSTICE KRISHNAN RAMASAMY
W.P.No.28200 of 2025
Rajaratnam Sinna Naatchiappan
Partner at M/s. Shringaram,
No. 14, Poes Road 3rd Street,
Teynampet, Chennai 600018
… Petitioner
Vs.
1. The Superintendent Of Central Tax
Range-i Mylapore Division, No.26/1, Mahatma Gandhi Road, Nungambakkam, Chennai-600 034.
2. Durai Seeniyasan Udaiyar No. 21/11, Karpaga Vilas,
CIT Colony 1st Main Road,
Mylapore, Chennai 600004
… Respondents
Prayer:
Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus, to direct the 1st respondent to initiate action against the 2nd respondent under Section 76 of the GST Act, 2017, for non-payment of tax collected from the Petitioner to the Government.
For Petitioner : Mr.Mohamed Uvaisullah Muhsin.A
For Respondent : Mr.Rajendran Raghavan, SPC for R1
ORDER
This writ petition has been filed to direct the 1st respondent to initiate action against the 2nd respondent under Section 76 of the GST Act, 2017 for non-payment of tax collected from the petitioner to the Government.
2. Mr.Rajendran Raghavan, learned Senior Panel Counsel, takes notice on behalf of the 1st respondent. By consent of the parties, the main writ petition is taken up for disposal at the admission stage itself.
3. The learned counsel for the petitioner would submit that the petitioner, who is the tenant, is a registered person and the 2nd respondent, who is the owner of the premises, is also a registered person. The said premises was leased out by the 2nd respondent to the petitioner on 16.02.2017. Subsequently, the GST Law came into force with effect from 01.07.2017. Thereafter, the petitioner had regularly paid the rent,
along with the applicable GST, to the 2nd respondent. However, the 2nd respondent had not remitted the tax amount, collected from the petitioner, to the Government Account and hence, the present writ petition came to be filed to direct the 1st respondent to initiate proceedings against the 2nd respondent in terms of Section 76 of GST Act, 2017.
4. At this juncture, this Court asked the petitioner as to whether any representation was made by him before the 1st respondent so as to
bring into their knowledge with regard to the failure on the part of the 2nd respondent in remittance of GST to the Government Account, for which, the petitioner submitted that he had not made any such representation in writing.
5. In reply, the learned Senior Panel Counsel appearing for the respondent would submit that generally, immediately upon the receipt of
any information with regard to the non-remittance of tax, the 1st respondent will issue a notice to the concerned person, who has failed to remit the tax. In this case, the Department had not yet received any such representation from the petitioner and hence, no proceedings were initiated. He would also submit that by virtue of this petition, the petitioner had brought to their knowledge with regard to the nonremittance of tax by the 2nd respondent and thus, necessary action will be taken against the 2nd respondent in terms of Section 76 of the GST Act, 2017.
6. Heard the learned counsel for the petitioner and the learned Senior Panel Counsel appearing for the 1st respondent and also perused the entire materials available on record.
7. In the case on hand, the main grievance of the petitioner is with regard to the non-remittance of GST, which was collected from the petitioner, by the 2nd respondent to the Government Account, due to which, the petitioner was not in a position to avail ITC.
8. According to the petitioner, he had paid the rent along withapplicable GST to the 2nd respondent and thereafter, he availed the ITC. However, since the 2nd respondent failed to remit the tax, which was said to have been collected from the petitioner to the Government Account, the 1st respondent had initiated the proceedings against the petitioner for reversing the ITC and also passed the order accordingly.
9. The 1st respondent had initiated the aforesaid proceedings on the ground that the GST amount was not paid by the supplier of the petitioner. According to the 1st respondent, due to failure on the part of the 2nd respondent in remitting the tax amount, which was said to have been collected from the petitioner, to the Government Account, certainly, the petitioner is not entitled to avail ITC, since only the provisional ITC was made to the petitioner’s account. Merely based on the provisional entries, the petitioner is not entitled to avail the ITC, unless and otherwise it becomes absolute.
10. No doubt, the availment of ITC would depend upon theremittance of GST by the supplier. Till such remittance, the entries would made in the electronic credit ledger, provisionally and once the supplier remit the tax amount to the Government Account, the said provisional entry will become absolute.
11. In this case, admittedly, the tax amount, which was said to have been collected from the petitioner, has not been remitted by the supplier/2nd respondent to the Government Account. In such case, only the provisional credit entries were made in the ECL and the same will not be available in the ECL to debit ITC, so as to avail it. As narrated above, once the amount is remitted by the supplier, thereafter the petitioner’s provisional entries in the ECL will become absolute and the same will be made available for availing ITC.
12. However, in this case, due to the failure on the part of the 2nd respondent in remittance of tax amount, which was said to have been collected from the petitioner, to the Government Account, the proceedings were initiated and the assessment order was passed by the respondent by confirming the reversing of ITC and calling upon the petitioner to remit the demand amount.
13. Now, the present petition has been filed to direct the 1st respondent to initiate proceedings against the 2nd respondent, under Section 76 of GST Act, for non-remittance of tax amount, which was said to have been collected from the petitioner.
14. Normally, when an information is received with regard to the non-payment of tax amount along with the proof, the respondents are supposed to have initiate the proceedings against the concerned person under Section 76 of the GST Act. However, in this case, no such information was provided by the petitioner to the 1st respondent either in the form of a representation or in any other manner. That apart, it is the obligatory on the part of the Department to initiate such proceedings against the Assessee in default in accordance with law and the petitioner
cannot take advantage of the same and take a plea to direct the 1st respondent to initiate the proceedings against the 2nd respondent and not to take any action against the petitioner by reversing the ITC since the petitioner had already discharged his liabilities while making the payment for the supplies and the default is only on the part of the supplier. Therefore, any default on the part of the 2nd respondent in remittance of GST would not ultimately be loss to the petitioner due to the reason of initiation of the proceedings by reversing the ITC. The petitioner will always have right to initiate the proceedings against the 2nd respondent/supplier to the extent of failure in remittance of GST, which was said to have collected from the petitioner, to the Government Account.
15. From the tone and terror of the representation made by the petitioner, it appears that since the petitioner had remitted the GST to its supplier, the petitioner had absolved its liabilities from payment of GST and thus, if there is any failure on the part of the supplier, it is only for the Department to initiate the appropriate legal action and recover the GST to the extent remitted by the petitioner to its supplier. Therefore, the intention of the petitioner is to treat the Department as its agent to collect GST from the 2nd respondent/supplier of the petitioner in the event of failure of the supplier to remit the same to the Government. It is made clear that at no point of time, the petitioner can treat the
Department as its collection agent to collect the tax amount on its behalf. It is the duty of the petitioner to follow up with the supplier and ensure the remittance of GST, which was collected from the petitioner. Till then, the GST will appear in the ECL provisionally. Once the amount is remitted by the supplier, the provisional credit available with the ECL of the petitioner will become absolute and made available for the petitioner to avail ITC.
16. Of course, the petitioner can initiate the proceedings against its supplier/2nd respondent, to the extent of loss incurred by them, due to the reversal of ITC by the Department on the ground of non-payment of GST by the 2nd respondent/supplier, by taking appropriate legal action for recovery of the said amount.
17. In fact, due to the non-payment of GST, which was said tohave been collected from the petitioner by the supplier, to the Government, the 1st respondent had initiated proceedings by reversing the ITC availed by the petitioner. Therefore, the 1st respondent already had knowledge about the failure on the part of the 2nd respondent/ supplier in remittance of GST, which was said to have been collected from the petitioner. In such case, it is up to the 1st respondent to initiate appropriate legal action against the 2nd respondent, under Section 76 of the GST Act, for such failure in remittance of GST to the Government Account.
18. Therefore, until the GST is remitted by the supplier of the petitioner, the GST will only appear provisionally in the ECL. The said provisional amount will not be available for availing ITC and to discharge liabilities. Upon the remittance of GST by the supplier of the petitioner, the said provisional entries will become absolute and once if it is made absolute, thereafter, the petitioner will be entitled to avail ITC.
19. In view of the above, now, the petitioner has to remit the GSTby making the payment through ECL. Once if the ITC is made absolute, the petitioner is certainly entitled for either refund or utilization of the amount for future payment of GST.
20. Therefore, it is clear that the right course of action available to the petitioner is to initiate recovery proceedings against the 2nd respondent since they had failed to remit the tax amount as promised to the petitioner, which is contrary to the terms and conditions of Contract of supply of goods to the petitioner by its supplier. Other than the said remedy, the petitioner will not have any other remedy, as prayed herein, since it will not be a proper course of action to address the grievance of the petitioner and set right the losses faced by him.
21. Further, as stated above, the petitioner can inform the 1st
respondent with regard to the non-remittance of tax amount by the 2nd respondent. However, it is up to the 1st respondent to initiate proceedings under Section 76 of the GST Act. In such view of the matter, this Court does not find any merits in the present petition and hence, this writ petition is liable to be dismissed.
22. In the result, this writ petition is dismissed. No cost.
04.08.2025
Speaking/Non-speaking order
Index : Yes / No Neutral Citation : Yes / No nsa
To
1. The Superintendent Of Central Tax
Range-i Mylapore Division, No.26/1, Mahatma Gandhi Road, Nungambakkam, Chennai-600 034.
2. Durai Seeniyasan Udaiyar No. 21/11, Karpaga Vilas,
CIT Colony 1st Main Road,
Mylapore, Chennai 600004
KRISHNAN RAMASAMY.J.,
nsa W.P.No.28200 of 2025
04.08.2025