Suppose there is only one bank in your area. That bank has a Rule that the depositors can’t directly deposit the amount, rather they are required to pay the amount to someone else (Say Mr. X). If Mr. X doesn’t deposit your funds specifying your account number, then the bank will not give you the Credit.
Now compare the Bank with the GST Law, you as the depositor and Mr. X as your supplier. You need to pay taxes to the supplier and if the supplier does not pay taxes to the Government, then you are not eligible for the Input Tax Credit [Section 16(2)(C) of the CGST Act 2017. Now this is the law of the Land and if you do not follow it, then there will be litigation. There is a very interesting case law in this regard, where The Hon’ble Madras High Court in M/S. D.Y. Beathel Enterprises versus The State Tax Officer has quashed the order imposing GST liability on the recipient on account of non-payment of tax by the supplier of goods. But if you want to avoid litigations, Notices of GSTR 2A vs. GSTR 3B mismatches etc. then the best way is to use available information to identify whether the Supplier is trustworthy and tax compliant or not
Source Taxguru
