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