GST ITC cannot be Denied Solely because Supplier’s Registration Cancelled Retrospectively: Madras HC [Read Order]
The retrospective cancellation of the supplier's registration, by itself, could not be treated as conclusive proof that the transactions were non-genuine or that the purchaser was disentitled to avail ITC.
![GST ITC cannot be Denied Solely because Supplier’s Registration Cancelled Retrospectively: Madras HC [Read Order]](https://images.taxscan.in/h-upload/2026/06/28/2141569-hc-2.webp "GST ITC cannot be Denied Solely because Supplier’s Registration Cancelled Retrospectively: Madras HC [Read Order]")
The Madras High Court has held that Input Tax Credit ( ITC ) cannot be denied solely on the ground that the supplier’s GST ( Goods and Services Tax ) registration was cancelled retrospectively. Justice Senthlikumar Ramamoorthy observed that “without examining as to whether the petitioner had established supply of goods by submitting invoices, e-way bills, lorry receipts and...
The Madras High Court has held that Input Tax Credit ( ITC ) cannot be denied solely on the ground that the supplier’s GST ( Goods and Services Tax ) registration was cancelled retrospectively.
Justice Senthlikumar Ramamoorthy observed that “without examining as to whether the petitioner had established supply of goods by submitting invoices, e-way bills, lorry receipts and the like, the petitioner’s claim should not have been rejected solely on the ground of the retrospective cancellation of the suppliers registration.”
Tvl. Fathima Traders filed a petition challenging separate assessment orders for the financial years 2019-20, 2020-21 and 2021-22. The petitioner contended that the assessing authority had disallowed the ITC claimed on purchases made from one of its suppliers solely because the supplier's GST registration had subsequently been cancelled with retrospective effect from July 1, 2017.
It was argued that the supplier was a registered person when the transactions were entered into and that the retrospective cancellation could not automatically invalidate genuine purchases.
The petitioner’s counsel, quoting the decision of Madras high court in M/s Engineering Tools Corporation v. Assistant Commissioner (ST), submitted that retrospective cancellation of a supplier's registration cannot be the sole basis for denying ITC.
The judgment of the case mentioned had held that the tax authorities are required to verify whether the transactions were genuine by examining relevant documentary evidence instead of rejecting the claim merely because the supplier's registration stood cancelled retrospectively.
The State defended the assessment orders by contending that certain invoices had been issued after the effective date of cancellation of the supplier's registration. It was further argued that the petitioner had failed to produce adequate documents to establish that the goods had actually been supplied and received. According to the Revenue, the denial of ITC was therefore justified.
The High Court observed that before disallowing ITC, the assessing authority ought to have verified whether the petitioner had produced invoices, e-way bills, lorry receipts and other documents evidencing genuine supply of goods.
The retrospective cancellation of the supplier's registration, by itself, could not be treated as conclusive proof that the transactions were non-genuine or that the purchaser was disentitled to avail ITC.
The bench set aside all the assessment orders and remanded the matter to the assessing authority for fresh consideration. The officer was directed to grant the petitioner a reasonable opportunity of hearing, examine the documentary evidence relating to the genuineness of the transactions, and pass fresh orders within three months.
The writ petition was disposed of accordingly.
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