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Introduction The issue regarding Input Tax Credit, which is claimed on invoices received from the suppliers whose GST registration was retrospectively cancelled, is an important matter that is in question in GST compliance, as indirectly it is attracting double taxation along with interest or penal
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FAQ :
ITC is a mechanism within GST law that allows taxpayers to offset the tax paid on their purchases against the tax liability on their sales, thereby preventing double taxation.
When a supplier's GST registration is cancelled retrospectively, tax authorities may question the legitimacy of the ITC claimed by the buyer, potentially leading to denial of credit and penalties.
To claim ITC, taxpayers need a valid tax invoice, must have received the goods or services, paid the tax to the government (either directly or via reverse charge), and filed their GST return.
A recipient can argue that the supplier's registration was active at the time of the transaction, they acted in good faith, fulfilled all Section 16 conditions, the invoices appear in GSTR-2A, and cite relevant court judgments.
GST payers should maintain proper records, reconcile GSTR-2A and GSTR-2B diligently, and respond promptly and in detail to any notices, citing compliance and relevant judicial precedents.
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