ITC rejection solely based on supplier’s cancelled registration quashed; matter remanded for proper review – Himachal Pradesh High Court {Himalaya Communication Pvt. Ltd. V/s Union of India – (2025) 31 Centax 329 (H.P.)}
Facts of the Case
The assessee claimed input tax credit under the CGST Act, 2017, which was rejected by the authorities solely on the ground that the supplier’s GST registration had been cancelled retrospectively. There was no indication that either the Assessing Officer or the Appellate Authority had examined the genuineness of the transaction or reviewed any supporting documentation. Instead, action was taken directly under Section 16(2) without proper verification.
Issue
The issue before the court was whether input tax credit can be denied solely on the basis of retrospective cancellation of the supplier’s GST registration, without any inquiry into the genuineness of the transaction.
Held
The High Court held that the genuineness of the transaction must be determined before any action is taken under Section 16 of the CGST Act. The authorities failed to examine the relevant documents or assess the bona fides of the transaction. As such, the rejection of ITC was found to be unjustified. The court set aside the impugned orders and remanded the matter back to the Adjudicating Authority for a fresh decision after proper evaluation of all necessary records.
