Retrospective cancellation of seller registration cannot, by itself, deny Input Tax Credit to the purchasing dealer.

Retrospective cancellation of a selling dealer's registration, by itself, cannot justify denial of Input Tax Credit to the purchasing dealer. The assessment had proceeded on the basis that the seller's registration was shown as cancelled before the purchase date in the web report, but that circumstance alone was held insufficient to reverse credit. Where there are factual disputes, such as mismatch in purchase particulars or possible suppression by the selling dealer, those matters must be examined in the proper statutory forum. On that basis, the objection founded only on cancellation of registration was rejected and the assessment on that ground was set aside.

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Issues: Whether retrospective cancellation of the selling dealer's registration can be a ground to deny or reverse Input Tax Credit claimed by the purchasing dealer.

Analysis: The assessment for the relevant year proceeded on the basis that the selling dealer's registration stood cancelled before the date of purchase as reflected in the web report. The legal position applied was that a later retrospective cancellation of registration, by itself, cannot justify denial of Input Tax Credit to a purchasing dealer. At the same time, the Court noted that if there are factual disputes, such as mismatch of purchase particulars or possible suppression by the selling dealer, they must be examined in the proper statutory forum.

Conclusion: The objection based on cancellation of registration was not accepted, and the assessment on that head was set aside in favour of the assessee.

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