Changes in GST rules

Allahabad High Court ruled that Input Tax Credit (ITC) cannot be denied to a genuine purchaser just because the supplier failed to pay GST. In M/s R.T. Infotech vs. Addl. Commissioner Grade 2 & Others, the court emphasized that buyers who comply with tax rules should not suffer due to supplier defaults.

Key Takeaways :

– Purchaser’s Compliance Matters: If a buyer has valid invoices and has paid via banking channels, ITC should not be denied

– Supplier’s Default Isn’t Buyer’s Fault: The buyer cannot be held responsible for the supplier’s failure to file returns or deposit tax

– GSTR-2A Mismatch Isn’t Final: ITC denial cannot be based solely on mismatches if proper documentation and payments exist

– Action Should Target the Supplier: Authorities should proceed against the defaulting supplier under Sections 73, 74 & 79 of the CGST Act

– Legal Precedents Support Buyers: The ruling aligns with Suncraft Energy (SC) and D.Y. Beathel Enterprises (Madras HC), reinforcing protection for diligent purchasers

Impact :

This judgment does not offer blanket protection under Sec. 16(2)(c) but ensures relief for buyers with proper documentation and traceable suppliers. Courts may take a different view if the supplier is untraceable