Supreme Court: VAT Credit Cannot Be Denied Due to Supplier’s Tax Default

• Supreme Court upheld High Court decision allowing VAT credit to genuine purchaser even when supplier fails to pay tax
• Case involved Shanti Kiran India Pvt Ltd who purchased goods from registered seller with valid invoice but seller did not deposit collected tax
• High Court ruled that purchaser cannot be denied VAT credit due to seller’s default when transaction was legitimate with proper documentation
• Tax department must recover unpaid taxes from defaulting seller rather than denying credit to innocent purchaser
• Supreme Court rejected revenue department’s appeal stating no interference needed since seller was registered and invoices were valid

Source: studycafe.in

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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