Buyer cannot Be Denied Credit if Supplier Defaults on Tax:

Buyer cannot Be Denied Credit if Supplier Defaults on Tax No GST ITC Denial Despite Supplier Cancellation | Section 74 Proceedings Held Invalid The Allahabad High Court held that GST Input Tax Credit (ITC) cannot be denied solely due to supplier registration cancellation. Section 74 proceedings were qushed for requirement of proof of fraud or suppression. Allahabad High Court: M/S Safecon Lifescience Private Limited Vs Additional Commissioner Grade 2 WRIT TAX No. 389 of 2023 Dated September 9, 2025 No automatic reversal of ITC from buyer on non-payment of tax by the seller: HC The High Court of Calcutta in the matter of SUNCRAFT ENERGY PRIVATE LIMITED Vs. THE ASSISTANT COMMISSIONER has held that No automatic reversal of Input Tax Credit (ITC) from buyer on non-payment of tax by the seller can be made without investigating the seller. High Court of Calcutta: Suncraft Energy (P.) Ltd. v. Assistant Commissioner, State Tax MAT 1218 OF 2023 WITHI.A NO. CAN 1 OF 2023 Dated August 02, 2023 ITC Cannot Be Denied Solely on GSTR-2A and GSTR-3B Mismatch As per the Kerala High Court, Merely on the ground that in Form GSTR-2A the said tax is not reflected should not be a sufficient ground to deny the assessee the claim of the input tax credit. Kerala High Court: M/s Mina Bazar Railway Station Road vs State Tax Officer, WP(C) NO. 30670 OF 2023 Dated September 19, 2023 ITC cannot be denied when GST Registration of supplier is cancelled with retrospective effect: HC Calcutta High Court in the matter of M/s GARGO TRADERS vs THE JOINT COMMISSIONER, COMMERCIAL TAXES (STATE TAX) & ORS. has held that Input Tax Credit (ITC) cannot be denied to the buyer only because the GST Registration of supplier was canceled with retrospective effect. Calcutta High Court: GARGO TRADERS vs THE JOINT COMMISSIONER, COMMERCIAL TAXES (STATE TAX) WPA 1009 of 2022; Dated June, 12 2023 High Court Quashes GST Confiscation Without Section 129 Notice | Relief for Bona Fide Purchaser The Andhra Pradesh High Court, in M/s Arhaan Ferrous and Non Ferrous Solutions Pvt. Ltd. vs. Deputy Assistant Commissioner, quashed the confiscation of goods and vehicles carried out under Section 130 of the CGST/APGST Act without first initiating proceedings under Section 129. The Court held that the mere allegation that the supplier was non-existent or had a suspended GST registration does not justify penal action against a bona fide purchaser who had valid invoices, e-way bills, and made payment through banking channels. The Court directed authorities to proceed under Section 129, granting the petitioners an opportunity of hearing, and ordered release of goods and vehicles upon compliance with specified conditions. HIGH COURT OF ANDHRA PRADESH: Arhaan Ferrous and Non-Ferrous Solutions Pvt.Ltd Vs Deputy Assistant Commissioner WRIT PETITION NO: 15481,15482,15486 AND 15487 OF 2023; Dated August 3, 2023; Special Leave to Appeal (C) Nos. 24711-24714/2023 against this Order filed by Department was dismissed by Supreme Court on November 6, 2023 High Court Quashes GST ITC Denial for Seller’s Default | Fresh Enquiry Ordered with Seller Examination In the case of M/s D.Y. Beathel Enterprises & Others vs. State Tax Officer, the Madras High Court (Madurai Bench) quashed GST assessment orders denying input tax credit (ITC) solely due to the seller’s failure to remit tax. The Court held that recovery must first be initiated against the defaulting sellers, and that penalizing genuine buyers who paid tax through valid invoices and banking channels—without even examining the sellers—violates natural justice. The matter was remanded for fresh enquiry with directions to examine the sellers and initiate recovery from them. Madras High Court: M/s. D. Y. Beathel Enterprises v. the State Tax Officer [W.P. (MD) Nos. 2127, 2117, 2121, 2152, 2159, 2160, 2168, 2177, 2500, 2530, 2532, 2534, 2538, 2539, 2540, 2503 & 2504 of 2021: Dated February 24, 2021 High Court Allows Fresh Hearing in GST ITC Denial Case | Order Passed Without Hearing Set Aside The Calcutta High Court set aside an order denying GST Input Tax Credit to Vishal Kumar Arya for non-appearance at a hearing, holding that the adjudicating authority must consider documents and grant a fair hearing. The Court remanded the case for fresh adjudication, directing that the prior order be treated as a show cause notice and that a final decision be made after personal hearing and consideration of documents. Calcutta High Court: Vishal Kumar Arya. Vs Assistant Commissioner, State Tax, Ultadanga Charge & Ors. M.A.T. No. 2004 of 2022 with I.A. No. CAN 1 of 2022; Dated January 20, 2023 High Court Upholds Right to Fair Hearing in GST ITC Denial Case | Retrospective Supplier Cancellation Not Sufficient High Court ruled that Input Tax Credit (ITC) cannot be denied solely due to retrospective GST registration cancellation of suppliers without proper inquiry. Calcutta High Court: Assistant Commissioner of State Tax vs. LGW Industries Ltd. & Ors. MAT 855 of 2022 with IA CAN 1 & CAN 2 of 2022; Dated September, 16 2022 High Court Quashes ITC Denial Based on Supplier’s GST Cancellation Following presidence of M/s. LGW Industries Limited & Ors. Vs. Union of India & Ors. in W.P.A No.23512 of 2019, High Court quashed orders denying ITC and initiating recovery solely based on retrospective cancellation of the supplier’s GST registration. The Court held that genuine transactions backed by valid documents, GSTR-2A entries, and bank payments cannot be invalidated unless collusion is proven. Calcutta High Court: Sanchita Kundu v. Assistant Commissioner of State Tax, W.P.A. 7231 of 2022; Dated May, 5 2022 For fraud committed by selling dealer, registration of purchasing dealer cannot be automatically cancelled Orissa High Court quashed the cancellation of GST registration based on ITC claimed from a supplier whose registration was later cancelled. The Court ruled that in the absence of proven collusion or fraud, the purchasing dealer cannot be penalized for the supplier’s defaults. The Department was directed to restore the petitioner’s registration and allow filing of pending returns. High Court of Orissa: Bright Star Plastic Industries v. Additional Commissioner of Sales Tax; W.P.(C)No.15265 of 2021; Dated October 4 2021 No ITC Denial for Buyer Based on Supplier Default High Court held that ITC cannot be denied merely because the supplier failed to remit tax. Madras High Court: Sri Ranganathar Valves (P.) Ltd. v. Assistant Commissioner; WP Nos.25879 to 25884 of 2016; Dated August 6, 2021 No GST ITC Denial If Seller Defaults, Unless Fraud or Collusion Proven High Court ruled that a bona fide purchasing dealer cannot be denied Input Tax Credit (ITC) solely because the selling dealer failed to deposit tax in the treasury. High Court of Punjab and Haryana: M/s Gheru Lal Bal Chand vs The State of Haryana and another; CWP 6573 of 2007; Dated September 23, 2011