E-Way Bill Stamped at Interception Confirms Goods Movement: Allahabad HC upholds ITC Claim Despite Supplier’s GST Reg. Cancelled After Transaction [Read Orde]
Allahabad High Court held that ITC cannot be denied when goods movement is proven by a stamped e-Way bill, even if the supplier’s GST registration was cancelled after the transaction.
![E-Way Bill Stamped at Interception Confirms Goods Movement: Allahabad HC upholds ITC Claim Despite Supplier’s GST Reg. Cancelled After Transaction [Read Orde]](https://images.taxscan.in/h-upload/2025/08/21/2079003-high-court-e-way-bills-itc-taxscan.webp "E-Way Bill Stamped at Interception Confirms Goods Movement: Allahabad HC upholds ITC Claim Despite Supplier’s GST Reg. Cancelled After Transaction [Read Orde]")
In a recent ruling, the Allahabad High Court ruled that Input Tax Credit (ITC) cannot be denied to a purchasing dealer when the movement of goods is proven through a stamped e-Way bill intercepted during transit, even if the supplier’s GST registration was cancelled after the date of the transaction.
Kesarwani Traders, the petitioner, filed a writ petition challenging the order passed under Section 74 of the U.P. Goods and Services Tax Act, as well as the appellate order dated December 24, 2024, and the recovery notice issued in DRC-07.
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The petitioner’s counsel argued that the transaction in question took place on June 20, 2018, and was supported by proper documentation such as tax invoice, bank statements, e-Way bill, a ledger, and other relevant materials.
The e-Way bill was stamped by a mobile squad of Chhattisgarh during interception on 21 June 2018, which confirmed the actual movement of goods. The petitioner explained that the transaction followed a “Bill to Ship to” model, where Purvanchal Tradelink India, the supplier, was shown as the buyer and the petitioner as the consignee. The vehicle number used for transportation was also consistent across documents.
The petitioner’s counsel further argued that on the date of the transaction, the supplier was a validly registered dealer under GST, and its registration was cancelled only later, on 28 September 2018. They pointed out that this fact had been brought to the attention of the authorities both during the original proceedings and in the appeal, but was not properly considered.
The department’s counsel argued that proceedings under Section 74 were valid because the supplier’s registration had been cancelled. The counsel argued that the seller was found to be unregistered, so the ITC claim could not be accepted.
The Division Bench comprising Justice Piyush Agrawal observed that the e-Way bill stamped during interception in Chhattisgarh confirmed that goods were actually in transit from Raipur, Chhattisgarh to the petitioner’s location.
The court also observed that the appellate authority had recorded the petitioner’s arguments regarding the interception and documents but failed to bring any material on record to contradict them.
The court explained that the movement of goods had been established, the supplier was registered on the date of the transaction and no adverse inference could be drawn against the petitioner. The court found that the authorities had failed to apply their mind to the evidence and had not disputed the genuineness of the documents submitted by the petitioner.
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The court held that the orders passed under Section 74 and the appeal were not sustainable in law. Both the orders, along with the recovery notice, were quashed. The court directed that any amount deposited during litigation be refunded to the petitioner within one month from the date a certified copy of the order is presented. The writ petition was allowed.
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