2026-VIL-186-GSTAT-DEL
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SGST Tribunal

GST - Input tax credit on invoices issued by a supplier whose registration was cancelled retrospectively - Section 16(2)(a) and 16(2)(c) of CGST Act, 2017 - SCN under Section 73 alleged that the credit was received from a supplier whose registration was cancelled retrospectively, and the demand with interest and penalty was confirmed relying on Section 16(2)(a) and an Instruction of the Board - FAA set aside the demand - Department filed appeal contending that retrospective cancellation shows the transactions were not genuine and that payment of tax to the Government was not verified - Whether input tax credit availed on invoices issued by a supplier who was registered on the dates of the invoices becomes inadmissible for the sole reason that the registration is afterwards cancelled with effect from a prior date - HELD - Section 16(2)(a) requires an invoice issued by a supplier registered under the Act, and an invoice is issued on a day, so the supplier must be registered on that day. On the dates of the invoices the supplier held a registration and the common portal showed a registered taxable person - Section 29(2) empowers cancellation from a retrospective date, but it only fixes the date from which the registration is treated as at an end between the Department and the registrant. Section 29(3) keeps the supplier answerable for tax on its supplies and contains no provision withdrawing the credit of those who bought from it - A buyer who has done everything the law asks on the day of purchase cannot hold his credit at the mercy of a later cancellation of which he had no notice. The Instruction of the Board only guides officers in scrutiny, cannot add to Section 16 a disqualification the Section does not contain, and does not bind an authority deciding an appeal - As regards Section 16(2)(c), the invoices appear in FORM GSTR-2A and the supplier filed its returns in FORM GSTR-3B, which cannot be filed without discharging the liability declared. Neither the notice nor the order alleged that the supplier failed to pay the tax - Retrospective cancellation of a supplier's registration does not by itself render the credit inadmissible, though it may be a reason for the Department to enquire and issue a notice if it has material that goods were not received, tax was not paid or the recipient was party to a fraud - The order of the First Appellate Authority is confirmed and the appeal of the Department is dismissed
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