Simplified Explanation of the Judgment
This judgment from the Patna High Court deals with a series of writ petitions filed by several registered dealers under the GST regime. These dealers had claimed Input Tax Credit (ITC) for goods purchased from suppliers. The tax authorities in Bihar had rejected their ITC claims, mainly on the ground that there was no physical movement of goods from the supplier to the dealer’s registered business address.

The lead case considered by the Court was CWJC No. 17914 of 2023, where the petitioner company was engaged in trading consumer goods, electronics, home appliances, and other products. The company followed a business model where, upon purchase, it directed its suppliers to deliver goods directly to the final consumer, instead of first sending them to the company’s own premises. This was done to save time, reduce transportation costs, and improve efficiency.

The petitioner argued that under Section 16(2)(b) of the CGST/BGST Act, a registered dealer is deemed to have “received” goods if they are delivered to a third party on the dealer’s direction. Therefore, even without physical possession at their own location, they satisfied the legal requirements for ITC. They also pointed out that the suppliers had duly deposited the GST with the government, and all purchase documents and tax payments were in order.

The tax department, however, argued that physical receipt of goods by the dealer was mandatory under GST law, citing decisions like State of Karnataka vs. M/s Ecom Gill Trading Pvt. Ltd. They maintained that in the absence of physical delivery to the dealer, the ITC claim was invalid. They also distinguished the government circulars relied upon by the petitioners, saying those related to specific contractual arrangements like works contracts, which were not present in this case.

The High Court carefully examined the provisions of Section 16 (Eligibility for ITC), Section 31 (Tax Invoice), Section 35 (Accounts and Records), and Section 155 (Burden of Proof) of the CGST Act. It noted the explanation to Section 16(2)(b), which clearly allows ITC when goods are delivered to a third party on the purchaser’s direction. The Court observed that in these cases, the movement of goods directly from the supplier to the end customer was backed by proper documentation, tax invoices, and evidence of GST payment.

Since the respondents did not dispute the fact that GST had been duly paid by the suppliers to the government, and the only ground for rejection was the lack of physical delivery to the dealers, the Court found this reasoning to be unjustified. The law recognizes “constructive receipt” through third-party delivery under the “bill-to-ship-to” model.

The Court therefore allowed the petitions, set aside the orders rejecting ITC, and directed the authorities to process the ITC claims accordingly.

Significance or Implication of the Judgment
This judgment is significant for businesses across Bihar and India operating under the GST system. It confirms that:

• ITC cannot be denied merely because goods are shipped directly from the supplier to the final customer, bypassing the dealer’s premises.
• The “bill-to-ship-to” concept under GST allows flexibility in supply chains and supports modern business models.
• As long as GST has been duly paid by the supplier and proper documentation exists, ITC entitlement stands.

This decision will help traders, e-commerce operators, and distribution-based businesses reduce unnecessary logistics costs without risking the loss of ITC.

Legal Issue(s) Decided and the Court’s Decision

• Issue: Whether physical receipt of goods by the dealer is mandatory to claim ITC under Section 16(2)(b) of the CGST/BGST Act.
  Decision: No, physical receipt at the dealer’s premises is not mandatory. Delivery to a third party at the dealer’s instruction satisfies the requirement.
• Issue: Whether GST authorities can deny ITC when GST has been paid by the supplier to the government.
  Decision: No, denial is unjustified if documentation and payment are in order.

Judgments Referred by Parties

• Aastha Enterprises vs. State of Bihar, CWJC No. 10359 of 2023
• State of Karnataka vs. M/s Ecom Gill Trading Pvt. Ltd., 2023 SCC OnLine SC 248

Judgments Relied Upon or Cited by Court

• State of Karnataka vs. M/s Ecom Gill Trading Pvt. Ltd., 2023 SCC OnLine SC 248
• SAJ Food Products Pvt. Ltd. vs. State of Bihar, CWJC No. 15465 of 2022

Case Title
M/s Utkrisht Trade Solutions Pvt. Ltd. & Ors. vs. State of Bihar & Ors. (With Connected Cases)

Case Number
CWJC No. 17914 of 2023 & batch matters (including CWJC No. 470 of 2024 and others)

Coram and Names of Judges
Hon’ble Mr. Justice P. B. Bajanthri
Hon’ble Mr. Justice Alok Kumar Sinha

Names of Advocates and who they appeared for
For Petitioners: Mr. Tarun Gulati, Sr. Advocate; Mr. Mrigank Mauli, Sr. Advocate; Mr. Brisketu Sharan Pandey, Advocate; Mr. Abhishek Kumar, Advocate; Mr. Madan Kumar, Advocate; and others as per case list.
For State of Bihar: Mr. P.K. Shahi, Advocate General; Mr. Vikash Kumar, SC 11; Mr. Vivek Prasad, GP 7; and others.
For Union of India: Dr. K.N. Singh, ASG; Mr. Anshuman Singh, Advocate.

Link to Judgment
a4fc5437-e835-42f8-8585-c4d33c0d4bb9.pdf

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