Bona Fide Recipient's ITC Cannot Be Denied Solely on Retrospective Cancellation of Supplier's GST Registration

Last updated: 06 July 2026

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Quick Summary

The Madras High Court has ruled that businesses cannot have their Input Tax Credit (ITC) denied simply because their supplier's GST registration was cancelled retrospectively. The court stated that the tax authority must first examine if the recipient has genuine proof of supply, such as invoices and e-way bills, before rejecting the ITC claim. The case was remanded for a fresh consideration, emphasising the need to verify the authenticity of transactions.

Court :
Madras High Court

Brief :
The Hon'ble Madras High Court in M/s. Fathima Traders v. The Deputy Commercial Tax Officer [W.P. Nos. 22419, 22420 & 22422 of 2023 dated June 12, 2026] quashed the orders passed by the Adjudicating Authority denying Input Tax Credit ("ITC") to the Assessee solely on the ground that the supplier's GST registration had been cancelled with retrospective effect from July 01, 2017 and held that without examining whether the Assessee had established genuine supply of goods through invoices, e-way bills, lorry receipts and other supporting documents, the ITC claim could not have been rejected merely on the ground of retrospective cancellation of the supplier's registration.

Citation :
W.P. Nos. 22419, 22420 & 22422 of 2023 dated June 12, 2026

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Attached File : 671907_6030_madras_hc_tvl_fathima_traders.pdf

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Judgement posted by

Bimal Jain

Service

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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