ITC of FY 2017-18 blocked

[SUSHIL BANSAL]

Dear experts,

our client purchased goods from a supplier in the FY 2017-18.Now the registration of the supplier cancelled by the department from the date which is before our purchase date and our ITC blocked by the department on dated 30.4.2024.My querry is whether this action of the department is legally valid as we have not been issued any show cause notice & the time limit of notice u/s 73/74 has already expired.

AI Summary

Blocking of input tax credit can be challenged when retrospective supplier cancellation and time-bar restrictions threaten legitimate ITC claims.
Administrative blocking of input tax credit under Rule 86A serves as a temporary protective step, but substantive denial or recovery of ITC is governed by Sections 73/74 subject to limitation and requires establishment of mens rea for extended periods. Retrospective cancellation of a supplier's registration does not automatically deprive a recipient of ITC if purchases were made when the supplier's registration was active; procedural safeguards, opportunity to be heard, and the respective burdens of proof on the department (to show fraud/mens rea) and on the recipient (to prove correct availment) determine entitlement. Appeal or writ remedies may be appropriate where notices are absent or time-barred.