TaxTMI 
TaxTMI 
One of my client purchased goods and paid to supplier during FY 2018-19. Supplier filed GSTR-1 properly and filed GSTR-3B Nil. Later department cancelled supplier’s GST no with retrospectively. Now the SCN issued by department to us referring section 16(2)(c) of the CGST Act for payment of tax with interest as the supplier did not deposited the amount to department. What remedy available to us. Please refer case law also in tax payer’s favor.
Section 16 (2) (c)
08 Apr 2024 
13 Replies 
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Input Tax Credit entitlement: bona fide recipients may retain credit where supplier registration later cancelled, subject to documentary proof.
Where a supplier's GST registration is retrospectively cancelled, a recipient who obtained genuine supplies, paid the supplier, filed ITC before cancellation, and whose supplier had filed GSTR-1 may contest demands under Section 16(2)(c). Key operative defences are proof of genuine transactions (invoices, e-waybills, payment proofs), evidence that ITC was availed prior to cancellation, and that the supplier was shown as registered on the portal at transaction time; recipient inability to monitor supplier deposit of tax shifts enforcement responsibility to the revenue. (AI Summary)
Where a supplier's GST registration is retrospectively cancelled, a recipient who obtained genuine supplies, paid the supplier, filed ITC before cancellation, and whose supplier had filed GSTR-1 may contest demands under Section 16(2)(c). Key operative defences are proof of genuine transactions (invoices, e-waybills, payment proofs), evidence that ITC was availed prior to cancellation, and that the supplier was shown as registered on the portal at transaction time; recipient inability to monitor supplier deposit of tax shifts enforcement responsibility to the revenue. (AI Summary)