Big Relief ITC Cannot Be Denied to a Bona Fide Purchaser Merely Because the Supplier's Registration Cancelled Retrospectively

Last updated: 23 July 2026

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The Supreme Court has ruled that a genuine buyer cannot be denied Input Tax Credit (ITC) simply because their supplier's registration was later cancelled. This decision affirms that if a buyer can prove the transaction's legitimacy through tax invoices, e-way bills, transport documents, banking payments, and filed returns, they are entitled to ITC. The Revenue must demonstrate fraud or wilful misstatement by the buyer, not just issues with the supplier's upstream transactions or registration status.

Court :
Supreme Court of India

Brief :
The Hon'ble Supreme Court in Additional Commissioner Grade 2 &Anr. v. M/s Safecon Lifescience Private Limited [SLP (C) No. 23993 of 2026 dated July 17, 2026] dismissed the Special Leave Petition filed by the Revenue against the judgment of the Hon'ble Allahabad High Court in M/s SafeconLifescience Private Limited v. Additional Commissioner Grade 2 and Another [Writ Tax No. 389 of 2023 dated September 09, 2025] , thereby affirming that proceedings under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017 ( “the UPGST Act” ) cannot be initiated to deny Input Tax Credit ( “ITC” ) to a bona fide purchaser who has duly established the genuineness of the transaction through tax invoices, e-way bills, transport documents, payment through banking channels and filing of returns, merely on the ground that the registration of the supplier was subsequently cancelled or that irregularities were alleged in the supplier's own upstream purchases, in the absence of any finding of fraud, wilful misstatement or suppression of facts to evade tax on the part of the recipient.

Citation :
SLP (C) No. 23993 of 2026 dated July 17, 2026

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1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

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3 Years PLAN

4999

(Excl. of GST ₹899)

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Attached File : 671907_6042_safecon_lifesciences_private_limited.pdf

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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