The Supreme Court has affirmed the constitutionality of Section 16(2)(c) of the CGST Act, although questions remain regarding supplier payment verification and protection for bona fide purchasers.
Supreme Court Affirms Constitutionality of Section 16(2)(c) of CGST Act
The Supreme Court has ruled that Section 16(2)(c) of the CGST Act is constitutionally valid. This section pertains to tax credit restrictions based on supplier compliance, a pivotal issue that has long been debated among practitioners and tax professionals.
While affirming the constitutionality, the Court acknowledged that several open-ended questions remain regarding the practical application of this provision, particularly concerning the verification of payments made to suppliers and the ability of bona fide purchasers to secure tax credits. The ruling signals the need for a clearer regulatory framework to assist taxpayers.
This decision ultimately invites further discourse among practitioners about the implications for tax credit claims and the need for thorough review of supplier payment processes to minimize risks associated with compliance. Legal professionals should prepare to navigate these complexities in advising clients regarding tax credits under the CGST framework.
Citations
- Supreme Court (2026) Y Volume Reporter Page
