- The Calcutta High Court has ruled that Input Tax Credit (ITC) should be allowed in cases where a genuine transaction has taken place and the supplier’s GSTIN has been cancelled retrospectively.
- The decision was made in the case of Gargo Traders vs Joint Commissioner of State Tax. The petitioner had availed ITC for supplies procured from a supplier whose registration was later cancelled with retrospective effect.
- The GST authorities disallowed the ITC, claiming the supplier was fake, but the petitioner submitted various documents to prove the transaction was genuine. The court found that proper verification was necessary before denying ITC and that the petitioner had complied with all statutory obligations.
- The ruling is significant for taxpayers who have been issued notices proposing to disallow ITC due to fake suppliers or retrospective cancellations of registration.
- Proper documentation is crucial to prove the genuineness of transactions, and recipients can claim ITC even if the vendor’s GST registration is cancelled retrospectively.
Source Yogesh Gaba
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