ITC cannot be denied merely on ground of Cancellation of GST Registration of Suppliers: Calcutta HC [Read Order]

The Calcutta High Court has held that the input tax credit cannot be denied in case of genuine transactions with suppliers whose GST registration is canceled.

The petitioners/assessee were aggrieved by the action of the department denying the benefit of the Input Tax Credit (ITC). The ITC was denied the purchase of the goods in question from the suppliers and asked the petitioners to pay the penalty and interest under the provisions of the GST Act. The penalty and interest were demanded on the ground that the registration of the suppliers in question had already been cancelled with retrospective effect, covering the transaction period in question.

Considering the arguments from both sides, Justice Md. Nizamuddin directed the department to consider afresh on the issue of their entitlement of benefit of input tax credit in question by considering the documents which the petitioners intend to rely in support of their claim of genuineness of the transactions in question and the respondent concerned shall also consider as to whether payments on purchase in question along with GST were actually paid or not to the suppliers (RTP) and also to consider as to whether the transactions and purchases were made before or after the cancellation of registration of the suppliers and also to consider as to compliance of statutory obligation by the petitioners in verification of identity of the suppliers (RTP).

“If it is found upon verification and considering the relevant documents that all the purchases and transactions in question are genuine and supported by valid documents and transactions in question were made before the cancellation of registration of those suppliers and after taking into consideration as to whether facts of the petitioners are similar to the judgements of the Supreme Court and various High Courts and of this Court upon which petitioners intend to rely and if it is found similar to the present case in that event the petitioners shall be given the benefit of input tax credit in question,” the Court said.

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