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Judicial Precedents on ITC Where Supplier Registration Is Cancelled / Supplier Found Bogus 🔴 CASE LAWS IN FAVOUR OF THE RECIPIENT (Bona Fide Buyer) 1. Assistant Commissioner of State Tax v. Suncraft Energy Pvt. Ltd. ( Calcutta High Court ) Held: Input Tax Credit cannot be denied to the recipient merely because the supplier failed to discharge tax liability or was later found non-compliant. Ratio: A purchasing dealer cannot be expected to verify whether the supplier has deposited tax with the Government . Such interpretation would make ITC provisions unworkable. Relevance: Strong authority against mechanical ITC reversal under Section 16(2)(c). 2. D.Y. Beathel Enterprises v. State Tax Officer ( Madras High Court ) Held: Before denying ITC to the recipient, the department must first proceed against the defaulting supplier . Ratio: Without exhausting recovery from the supplier, ITC cannot be reversed from the bona fide purchaser. Relevance: Most-cited judgment in bogus billing / su...

Input Tax Credit Cannot Be Denied to Bona Fide Buyer Due to Supplier’s Bogus Billing & Retrospective GST Registration Cancellation – Legal Position, Case Laws & Remedies Introduction A recurring and high-stakes dispute under GST is denial of Input Tax Credit (ITC) to a genuine recipient merely because the supplier’s GST registration is cancelled retrospectively on allegations of bogus billing / fake invoicing. In many cases: The recipient purchased goods or availed services in the normal course of business Full payment including GST was made through banking channels ITC is reflected in GSTR-2A / GSTR-2B Later, the supplier’s registration is cancelled ab initio alleging fake billing The department issues a Show Cause Notice (SCN) proposing ITC reversal, interest and penalty This article explains: What the CGST Act, 2017 and Rules actually provide Whether ITC can be denied to a bona fide purchaser Supreme Court and High Court jurisprudence (in favour and against) Action steps to ...