Can ITC Be Denied for Cancelled GSTIN?
In recent times, the issue of ITC denial on cancelled GSTIN has worried many taxpayers. Often, genuine buyers face ITC rejection if the supplier’s GST registration is cancelled retrospectively. Let’s decode this issue with the latest High Court decisions, CBIC stance, and practical steps to protect your Input Tax Credit.
Why is Retrospective Cancellation Happening?
- GST officers cancel GSTINs for non-filing of returns or fake invoices.
- Sometimes, cancellation is made effective from a past date.
- This means your supplier’s GSTIN was valid when you purchased goods/services, but later shown as cancelled.
Legal Position on ITC Denial on Cancelled GSTIN
Indian courts have repeatedly protected genuine buyers:
| Court | Key Finding |
|---|---|
| Calcutta HC in Suncraft Energy Pvt Ltd vs Asst. Commr. | ITC cannot be denied if buyer proves bona fide purchase. |
| Delhi HC in Sri Avantika Contractors vs Asst. Commr. | Mere supplier default can’t block recipient’s ITC. |
| Madras HC in Sri Ranganathar Valves Pvt Ltd | Genuineness of transaction is crucial, not just registration status. |
Legal Basis:
- Section 16(2) of CGST Act: Buyer must receive goods/services, have tax invoice, and ensure supplier paid tax.
- If you meet these, ITC should not be denied solely due to later cancellation.
What CBIC Clarifies
- CBIC’s FAQs (based on Circulars) stress buyer’s due diligence.
- Use GST portal to verify supplier’s GSTIN status.
- Download invoices, E-way Bills, payment proofs — these strengthen your case if questioned.
✅ Check supplier GSTIN on GST.gov.in
How to Avoid ITC Denial on Cancelled GSTIN
Follow these simple steps:
- ✔️ Always verify GSTIN validity before each purchase.
- ✔️ Keep proof of delivery and tax payment.
- ✔️ Pay only through banking channels.
- ✔️ File returns on time to reflect correct ITC.
- ✔️ Respond promptly to any GST notices.
Expert Tip
“Don’t rely on old supplier data — do a quick GSTIN check monthly. This simple step saves you from big ITC disputes later.” — Efiletax GST Team
FAQs on ITC Denial on Cancelled GSTIN
Q1: Can GST officer deny ITC if my supplier’s GSTIN is cancelled later?
A: No, not automatically. Officer must check if your purchase was genuine and conditions under Section 16(2) were met.
Q2: What documents help prove genuineness?
A: Valid invoice, E-way Bill, proof of delivery, payment receipt, and GST return entries.
Q3: How can I check if my supplier’s GSTIN is active?
A: Visit gst.gov.in → Search Taxpayer → Enter GSTIN → Check status.
Key Takeaway
Courts back genuine taxpayers. So, ITC denial on cancelled GSTIN without fair examination is legally weak. Always maintain clean records and proactive checks.
Conclusion
Don’t let retrospective cancellations eat your rightful ITC. Stay compliant, follow due diligence, and take expert help when needed.
👉 Need GST filing or ITC dispute support? Talk to Efiletax experts today!
Summary
ITC denial on cancelled GSTIN must follow legal checks. Recent High Courts protect buyers with valid invoices and genuine transactions. Learn how to safeguard your Input Tax Credit if your supplier’s GSTIN gets cancelled retrospectively. Stay compliant with Efiletax guidance.