ITC cannot be reversed solely on ground that GST registration of supplier was canceled with retrospective effect [Read Order]

In the matter of M/s. Engineering Tools Corporation vs. the Assistant Commissioner (ST) [Writ Petition No.3505 of 2024 and W.M.P.Nos.3758 & 3759 of 2024] dated 15.02.2024, the Madras High Court has directed that the claim of Input Tax Credit (ITC) cannot be solely rejected on the ground that the supplier’s GST registration was cancelled with retrospective effect.

Facts of the Case:

The petitioner asserts that he had purchased goods in 2017-2018 and that such purchases are supported by tax invoices, e-way bills, transport documents and proof of payment to the supplier through regular banking channels. In spite of submitting all these documents, it is stated that the ITC was reversed solely on the ground that the registration of the petitioner’s supplier was cancelled with retrospective effect.

Observation of the Court:

The petitioner purchased goods in 2017-2018 and, at the highest, the petitioner may be called upon to produce evidence of the existence of the supplier at the relevant point of time.

In addition, the petitioner may be called upon to prove that the transaction was genuine by providing relevant documents such as tax invoices, e-way bills, lorry receipts, delivery challans, proof for payment and the like. In the case at hand, it appears that the petitioner submitted such documents but these documents were disregarded.

The assessing officer is directed to consider whether the transaction was genuine by examining all relevant documents in that regard. The ITC claim shall not be rejected upon such reconsideration solely on the ground that the supplier’s GST registration was cancelled with retrospective effect.

Order of Court

Hence, the impugned assessment order was quashed and the matter was remanded for reconsideration.

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