GST Input Tax Credit Restored: Supplier Registration Cancellation Not Sole Ground for Denying Credit Under Rule 36(4)

HC quashed the assessment order reversing Input Tax Credit (ITC) due to supplier's cancelled GST registration. The court directed the assessing officer to re-examine all submitted documents and determine transaction genuineness, emphasizing that ITC cannot be rejected solely based on registration cancellation. A fresh assessment order was mandated within two months, providing the petitioner a reasonable opportunity to present evidence.

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Issues involved:
The assessment order reversing Input Tax Credit (ITC) due to cancellation of supplier's GST registration with retrospective effect.

Summary:

Issue 1: Reversal of Input Tax Credit (ITC) based on supplier's cancelled GST registration

The petitioner challenged an assessment order reversing the ITC availed, citing the cancellation of the supplier's GST registration with retrospective effect. The petitioner contended that despite providing supporting documents like tax invoices, e-way bills, and proof of payment, the ITC reversal was solely based on the supplier's cancelled registration. The respondent argued that bill trading is common and raised doubts on the existence of the supplier, M/s.Shikhar Technologies.

Issue 2: Judicial scrutiny of the impugned order

The impugned order stated that the petitioner failed to prove the existence of M/s.Shikhar Technologies, labeling them as a non-existent dealer issuing fake invoices. The court noted that the petitioner had submitted relevant documents, which were disregarded during the assessment. The court found the rejection of the petitioner's contentions solely on the supplier's cancelled registration as unsustainable.

Issue 3: Court's decision and directions

The court quashed the assessment order and remanded the matter for reconsideration. The assessing officer was directed to examine all relevant documents to determine the genuineness of the transaction. The court emphasized that the ITC claim should not be rejected based only on the supplier's cancelled registration. A fresh assessment order was to be issued within two months, providing a reasonable opportunity to the petitioner. The writ petition was disposed of with no order as to costs.

This summary provides a detailed breakdown of the issues involved in the legal judgment, outlining the arguments presented by both parties and the court's decision and directions regarding the reversal of Input Tax Credit based on the cancellation of the supplier's GST registration.

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