Madras High Court Upholds Input Tax Credit Benefit Despite Retrospective Registration Cancellation

The Madras High Court ruled in favor of the petitioner, holding that denying input-tax credit due to the retrospective cancellation of registration certificates is unjustified. The court emphasized that benefits obtained by the petitioner based on valid documents during transactions cannot be denied. Citing previous Supreme Court decisions, the court set aside notices and assessment orders seeking to revoke input-tax credit. The writ petitions were allowed without costs, with the Additional Government Pleader concurring with the court's decision, resulting in the closure of related miscellaneous petitions.

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Issues:
1. Denial of input-tax credit due to cancellation of registration certificates with retrospective effect.

Analysis:
The judgment delivered by the Madras High Court addressed the issue of denying input-tax credit based on the cancellation of registration certificates with retrospective effect. The petitioner relied on a previous case where a similar prayer was allowed by the court. The court emphasized that reversing input-tax credit due to retrospective cancellation of registration certificates is not justified. It was highlighted that benefits accrued to the petitioner based on valid documents during the sale and purchase of goods, where taxes were paid, cannot be denied. The court referred to the law laid down by the Supreme Court in a previous case to support its decision. Consequently, the court set aside the notices, revised assessment orders, and provisional assessment order that sought to deny input-tax credit based on the cancellation of registration certificates. The writ petitions were allowed, and no costs were imposed, leading to the closure of connected miscellaneous petitions. The Additional Government Pleader agreed that the matter was covered by the court's judgment, leading to the allowance of the writ petition on similar terms without any costs, resulting in the closure of the connected miscellaneous petition.

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