The Madras High Court in the case of M/S. ENGINEERING TOOLS CORPORATION vide Order No. No.- Writ Petition No. 3505 of 2024 And W.M.P.Nos. 3758 & 3759 of 2024 dated 15.02.2024, has held that Input Tax Credit (ITC) claim of the petitioner could not be rejected on the ground that the GST registration of the relevant supplier was cancelled with retrospective effect.

In this case, the petitioner challenged the assessment order by which the Input Tax Credit (ITC) availed was reversed on the ground that the GST registration of the relevant supplier was cancelled with retrospective effect. The petitioner submitted that they had purchased goods from M/s.Shikhar Technologies in 2017-2018 and that such purchases are supported by tax invoices, e-way bills, transport documents and proof of payment to the supplier through regular banking channels. Further, it is submitted that, despite of submitting all these documents, the ITC was reversed solely on the ground that the registration of the petitioner’s supplier was cancelled with retrospective effect.

The High Court observed the impugned order, which states that “the contentions of the petitioner were rejected entirely on the ground that the petitioner should have proved the existence of M/s.Shikhar Technologies. Also, the petitioner may be called upon to prove that the transaction was genuine by providing relevant documents such as tax invoices, e-way bills, lorry receipts, delivery challans, proof for payment and the like”. 

The Court noted that this reasoning given in the impugned order is inadequate, asserting that the petitioner had already submitted relevant documents supporting the transaction. The court deems the assessment order unsustainable in the given circumstances.

The Court quashed the assessment order and remands the matter for reconsideration. The assessing officer is directed to examine the genuineness of the transaction by thoroughly reviewing all relevant documents. The assessing officer is directed to consider whether the transaction was genuine by examining all relevant documents in that regard. The Court emphasis that The ITC claim shall not be rejected upon such reconsideration solely on the ground that the supplier’s GST registration was cancelled with retrospective effect and a fresh assessment order shall be issued upon reconsideration, after providing a reasonable opportunity to the petitioner. 

To read the complete judgment 2024 Taxo.online 303