Input tax credit protects bona fide purchasers when suppliers receive GST but fail to file returns or remit tax.

Input tax credit cannot be denied to a bona fide purchasing dealer solely because the registered supplier failed to file GST returns or deposit tax after receiving it. Where the purchaser holds a valid tax invoice and has paid the tax to the supplier, the supplier's admitted default does not justify disallowance of credit under the stated conditions of the Assam GST law. Recovery action should instead be taken against the defaulting supplier. Consequently, denial of credit and the related GST demand against the purchaser were described as unsustainable.

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Issues: Whether input tax credit can be denied to a purchasing dealer who paid GST to the registered selling dealer, solely because the selling dealer failed to file returns and deposit the tax.

Analysis: Sections 16(2)(c) and 16(2)(d) of the Assam Goods and Services Tax Act, 2017 were applied in accordance with the binding interpretation that protects a bona fide purchasing dealer holding a valid tax invoice and having paid the tax to the supplier. The supplier admitted receipt of the GST but non-filing of returns. The purchaser's input tax credit could not be disallowed merely due to the supplier's default; recovery action lies against the defaulting supplier.

Conclusion: Denial of input tax credit and the consequential GST demand against the purchasing dealer were unsustainable. The issue was decided in favour of the assessee.

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