In this landmark ruling, the Allahabad High Court reaffirmed that:

  • Input Tax Credit (ITC) cannot be denied when the supplier was duly registered on the date of transaction, even if registration is cancelled subsequently.

  • Mere non-existence of the supplier at the time of later inspection does not establish sham transactions.

  • Proceedings under Section 74 of the CGST Act are unsustainable in the absence of a specific finding of fraud, wilful misstatement, or suppression of facts.

  • Filing of GSTR-1, GSTR-3B, and reflection in GSTR-2A must be properly verified by authorities before denying ITC.

The Court relied upon and applied the ratio laid down by the Supreme Court in Suraj Impex (India) Private Limited v. Union of India, along with consistent views taken in Commissioner of Sales Tax v. Agrawal Rolling Mills, R.T. Infotech v. Additional Commissioner, and Solvi Enterprises v. Additional Commissioner.

Accordingly, the impugned orders were quashed, and the matter was remanded for de novo consideration in accordance with law.

Link to download the order

https://mytaxexpert.co.in/uploads/1766385863_KhurjaScrapTradingCompanyAllahabadHighCourt.pdf