Input tax credit cannot be denied for retrospective supplier cancellation without proof of bogus purchases; revision failed on jurisdictional defect.

Input tax credit cannot be denied merely because the supplier's registration was retrospectively cancelled; the Department must show that the purchases were sham, bogus, or otherwise non-genuine, and in the absence of such proof the credit was upheld. A revisional order also cannot stand where it is based on material outside the subordinate record and the jurisdictional objection is left unaddressed, because that defect goes to the root of the revision. The revisional confirmation of additional tax liability and interest was therefore set aside to that extent, and the assessee was held entitled to input tax credit on the disputed purchases.

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Issues: (i) Whether input tax credit could be denied solely because the selling dealer's registration was cancelled retrospectively, without proof that the purchases were bogus or non-genuine; (ii) Whether the revisional order could be sustained when the initiation and confirmation of revision rested on material outside the record and the jurisdictional objection was not properly dealt with.

Issue (i): Whether input tax credit could be denied solely because the selling dealer's registration was cancelled retrospectively, without proof that the purchases were bogus or non-genuine.

Analysis: The determining factor was whether the Department had established that the purchases were sham or otherwise not genuine. Mere retrospective cancellation of the seller's registration was not enough to disallow credit in the absence of material showing that the transactions lacked genuineness or that the purchaser had acted in collusion to evade tax. The earlier division bench decision on identical facts was followed.

Conclusion: The issue was answered in favour of the assessee. Input tax credit could not be denied on the stated ground.

Issue (ii): Whether the revisional order could be sustained when the initiation and confirmation of revision rested on material outside the record and the jurisdictional objection was not properly dealt with.

Analysis: The revisional proceedings were held to be unsustainable because they were founded on material extraneous to the record of the subordinate authority. The challenge to jurisdiction went to the root of the matter, and the revisional authority as well as the Tribunal were required to address it before affirming the tax demand and interest.

Conclusion: The issue was answered in favour of the assessee. The revisional order and the Tribunal's confirmation of additional tax liability and interest could not be sustained.

Final Conclusion: The petition succeeded and the impugned revisional order was set aside to the extent it confirmed additional tax liability and interest, with the assessee held entitled to input tax credit on the purchases in question.

Ratio Decidendi: Input tax credit cannot be denied merely because the supplier's registration was retrospectively cancelled unless the Department proves that the underlying transactions were not genuine, and a revisional order founded on extraneous material or unaddressed jurisdictional defect cannot stand.

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