Retrospective GST Registration Cancellation Not Sole Grounds for Denying Input Tax Credit, Rules Court
In a significant judgment delivered on November 4, 2025, the Calcutta High Court, Circuit Bench at Jalpaiguri, has set aside the appellate authority's order concerning the denial of Input Tax Credit (ITC) based on retrospective cancellation of GST registration of the supplier. The judgment, pronounced by Justice Hiranmay Bhattacharyya, addressed the case of Shyamalmay Paul versus the Assistant Commissioner of State Goods and Services Tax (SGST), Siliguri Charge.
The petitioner, Shyamalmay Paul, challenged the appellate authority's decision, which affirmed the adjudicating authority's order denying ITC on the grounds that invoices were issued after the effective date of cancellation of the supplier's GST registration. The case revolved around discrepancies detected in the GST returns for the financial year 2019-2020, specifically under serial no. 3, where the petitioner was alleged to have availed ITC from suppliers whose GST registration was retrospectively cancelled.
The petitioner presented various documents, including tax invoices, e-way bills, and transport documents, to substantiate the genuineness of the transactions. However, the appellate authority upheld the adjudicating authority's decision without addressing the relevancy of these documents.
The court criticized the appellate authority for failing to perform its statutory duty by not returning findings on the documents presented by the petitioner. It highlighted that retrospective cancellation of a supplier's registration cannot be the sole ground for denying ITC to a purchaser, particularly when the registration was valid at the time of the transactions.
Justice Bhattacharyya directed the appellate authority to reconsider discrepancy no. 3, providing a reasoned order after an opportunity for a hearing. The court emphasized the necessity for the appellate authority to consider all documents on record and provide clear findings regarding their relevancy.
This judgment underscores the importance of thorough examination and reasoned decision-making in GST disputes, especially concerning the denial of ITC due to retrospective registration cancellations.
Bottom Line:
Retrospective cancellation of GST registration of a supplier cannot be the sole ground for denying Input Tax Credit (ITC) to a purchaser.
Statutory provision(s): West Bengal Goods and Services Tax Act, 2017, Section 73(1), Section 73(9), Section 107, Central Goods and Services Tax Act, 2017, Section 16
