ITC Declined

[ABHAY BHAGALI]

In the financial year. 2223, we have purchased good as a single Invoice from a supplier who issued an e-way bill and we paid the money to him as well. The supplier has filed GSTR-1 but not filed GSTR-3B with the tax to the government. His GST registration was canceled suo motto, from the prior date of the invoice issued to us. We received an intimation ASMT 10 and DRC 01A for declining the ITC of said invoice. Thereafter, the supplier was forced by us to pay the basic tax and penalty which he has done from his login portal using DRC-03, in the comment section he has mentioned the invoice details and the intimation of the notice to us with ARN number and paid to the government. When we approach to the GST officer, he declined the ITC credit utilization and issued us a show cause notice with penalty. We are arguing with the GST office stating that all conditions in mentioned in section 16 (2) has been fulfilled. The ITC declined charge should be dropped and same should be allowed fully.

The GST officer has declined to do so and forcing us to go to appeal, please advise.

AI Summary

Input tax credit entitlement upheld where Section 16(2) conditions are met despite supplier's retrospective cancellation.
Denial of input tax credit was issued after the supplier's GST registration was retrospectively cancelled, despite the purchaser having taken ITC on a valid invoice and the supplier later regularising tax payment; where Section 16(2) conditions are met, retrospective cancellation alone does not defeat the purchaser's entitlement, and the purchaser should pursue appeal remedies post adjudication while preserving personal hearing records and relying on favourable High Court precedents.