GST
TRT-2025-
High court of Allahabad
Date:-29-08-25
In:-
Issue Favourable to Tax Payer ?:-
Order date: 29 Aug 2025
Parties: M/s. Khurja Scrap Trading Company v. Addl. Commissioner (Appeals) & Anr.
Facts -
- Petitioner availed ITC on roofing sheets purchased in Nov 2021 from a dealer validly registered at that time.
- Supplier’s registration was later cancelled in April 2022, leading to denial of ITC and imposition of penalty. Petitioner relied on banking records, invoices, and GST returns to prove bona fides.
Issue -
- Whether ITC can be denied to the purchaser when the supplier was validly registered at the time of supply but later found non-existent?
Order -
- The Single bench of the Hon’ble High Court clarified that liability under Section 74 arises only in cases of fraud, suppression or willful misstatement. Since no such conduct was attributed to the petitioner, invocation of Section 74 was unjustified.
- Once the supplier was a valid registered dealer at the time of transaction, ITC accrued to the purchaser as a vested right. The subsequent cancellation of the seller’s registration cannot retrospectively nullify the buyer’s entitlement.
- Authorities failed to discharge their duty of verification, they ignored invoices, movement documents and returns filed, and proceeded mechanically on the basis of post-cancellation inspection.
- The impugned orders of assessment and appeal were quashed. The matter was remanded for fresh adjudication de novo within two months after giving the petitioner a proper opportunity of hearing.
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