ITC cannot be denied even if the supplier’s registration is cancelled from retrospective date.
The Hon’ble High court in its recent judgement in the case of M/S Solvi Enterprises vs Additional Commissioner Grade 2 And … on 24 March, 2025(1287/2025), has held that ITC cannot deny ITC even if the supplier registration cancelled from retrospective date.
In this case, the court observed that it is not in dispute that the purchase was made by the petitioner from the firm, which was duly registered under the GST Act at the time when the transaction was made. Once the seller was registered at the time of the transaction in question, no adverse inference can be drawn against the petitioner.
Further, the record shows that the registration of the selling dealer was cancelled retrospectively i.e. w.e.f. 29.01.2020 and not from its inception which goes to show that the transaction between petitioner and seller was registered and having valid registration in his favour.
Under the GST regime, all details are available in the GST Portal and therefore, authorities ought to have been verified the same as to whether the filing of GSTR-1A and GSTR-3B, how much tax has been deposited by the seller, but the authorities have failed to do so.
Perusal of the contents of afore-quoted Rule 36 of the GST Rules, 2017 provides that the required documents for claiming input tax credit should be made available and the same may be reflected in GSTR-3B.
From the afore-quoted Sections 16 & 74 of the GST Act, 2017 as well as Rule 36 of the GST Rules, 2017, it is clear that the provisions as provided, certain benefit of input tax credit to the registered person should be provided on the fulfillment of conditions as well as documents required to be provided therein.
Furthermore, Section 74 of the GST Act, 2017 provides the power to the State-authorities to proceed against the registered dealer if I.T.C. has wrongly availed or utilized by reason of fraud or willful misstatement of fact or by means of fraud, and upon the adjudication, can recover the same.
The copy of the order is as under:
