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ITC cannot be denied for retrospective cancellation of supplier's registration

Updated: Feb 24

ITC cannot be denied due to retrospective cancellation of suppliers registration

Engineering Tools Corporation Vs Assistant Commissioner

The petitioner challenged an assessment order issued on December 30, 2023, which reversed the Input Tax Credit (ITC) previously availed by the petitioner. The reversal was based on the cancellation of the GST registration of the petitioner's supplier, M/s.Shikhar Technologies, with retrospective effect.

Petitioner's Contentions

The petitioner contends that they had validly purchased goods from M/s.Shikhar Technologies during the 2017-2018 period, supported by tax invoices, e-way bills, transport documents, and proof of payment through regular banking channels. Despite submitting all necessary documents, the ITC was reversed solely due to the retrospective cancellation of the supplier's GST registration.

Court Decision

Upon examination of the impugned order, the court notes that the reversal of ITC was based solely on the cancellation of the supplier's registration and disregarded the petitioner's submitted documents. The court deems this assessment order unsustainable and quashes it. The matter is remanded for reconsideration by the assessing officer, directing them to examine all relevant documents to ascertain the genuineness of the transaction. The court emphasizes that the ITC claim should not be rejected solely due to the supplier's registration cancellation. The assessing officer is given a maximum period of two months to issue a fresh assessment order after reconsideration.


The writ petition is disposed off with no order as to costs. The court's decision provides relief to the petitioner and underscores the importance of considering all relevant evidence in tax assessments.

Overall, the court's ruling sets a precedent for fair treatment of taxpayers and upholds the principles of natural justice in taxation matters.


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