Input tax credit survives retrospective cancellation of supplier registration, but the dealer must still prove genuine supply and delivery.

A purchasing dealer cannot be denied input tax credit merely because the supplier's registration was retrospectively cancelled after the sale. The writ petitions were entertained on merits despite the availability of an appellate remedy. However, the credit claim still required factual substantiation, and the petitioner's invoice-wise and movement-related evidence was found insufficient on the existing record. Applying the preponderance of probability standard, the Court remitted the matter for fresh consideration so the assessing authority could re-examine the evidence and determine whether the burden of proof had been discharged.

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Issues: (i) whether the writ petitions were maintainable despite the availability of an appellate remedy; (ii) whether input tax credit could be denied solely because the selling dealers' registrations were cancelled retrospectively; and (iii) whether the petitioner had discharged the burden of proof to justify the input tax credit claimed.

Issue (i): whether the writ petitions were maintainable despite the availability of an appellate remedy

Analysis: The writ petitions had already been entertained earlier, and the Court found it inappropriate to reject them at that stage merely on the ground of alternate statutory remedy. In the circumstances of the case, the challenge was examined on merits rather than driving the petitioner to appeal.

Conclusion: The issue was answered in favour of the petitioner.

Issue (ii): whether input tax credit could be denied solely because the selling dealers' registrations were cancelled retrospectively

Analysis: The Court followed the settled view that a purchasing dealer cannot be denied input tax credit merely because the seller's registration was cancelled with retrospective effect after the sale. The provisional nature of the credit and the power to revise it did not alter that principle, but the claim still had to be tested on the facts and evidence produced.

Conclusion: The issue was answered in favour of the petitioner.

Issue (iii): whether the petitioner had discharged the burden of proof to justify the input tax credit claimed

Analysis: The petitioner did not produce adequate invoice-wise and movement-related material to substantiate actual transport and delivery of goods. The Court noted that the claimed mode of transport and absence of supporting documents required a factual verification, and that the claim could not be regularised on the existing record. Applying the principle of preponderance of probability, the authority was required to examine the evidence afresh.

Conclusion: The issue was not accepted on the present record, and the matter was sent back for fresh consideration.

Final Conclusion: The legal position on input tax credit was affirmed in favour of the petitioner, but the impugned orders were set aside and the matter was remitted for fresh adjudication on the evidence to be produced.

Ratio Decidendi: Input tax credit cannot be denied merely because the supplier's registration was retrospectively cancelled, but the purchasing dealer must still substantiate the genuineness of the claim with cogent evidence and satisfy the burden of proof before the assessing authority.

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