Madras HC: GST ITC Cannot be Denied for Retrospective Registration Cancellation

Madras HC Rules on GST ITC and Retrospective Cancellation

The Madras High Court ruled that the retrospective cancellation of a supplier’s registration does not serve as sufficient grounds to deny Input Tax Credit (ITC) claims. The court stressed that such cancellations alone are not conclusive evidence that the transactions lacked genuineness or that the purchaser should be barred from availing ITC.

In reaching this conclusion, the court examined various facets of tax law, placing significant emphasis on ensuring evidence substantiates claims of non-genuineness in transactions rather than relying solely on administrative cancellations.

This ruling provides a crucial precedent for businesses claiming ITC. Practitioners should advise their clients to maintain thorough documentation and to be prepared to argue for their claims in an environment of retrospective actions that might unjustly affect tax positions.