Vijay Bishnoi, CJ. & N. Unni Krishnan Nair, J.
High Court Held
The Hon’ble High Court held that Section 16(2) must be read down in line with
the prior ruling, reaffirming that ITC cannot be denied due to the selling dealer’s
failure to deposit tax. Instead, the department must pursue recovery from the
defaulting seller. The court emphasized that burdening compliant purchasing
dealers with such consequences is inequitable. Accordingly, the ruling favored
the assessee, ensuring ITC entitlement despite the selling dealer’s non-
compliance
Suncraft Energy Pvt. Ltd. v. Assistant Commissioner (Calcutta HC,
2023; SLP dismissed by SC, 2023)
Facts: Buyer availed ITC based on genuine invoices, payments, and
receipt of goods. Supplier didn’t upload invoices in GSTR-1 → so invoices
didn’t appear in buyer’s GSTR-2A.
Dept’s action: Reversed ITC for mismatch.
Court’s ruling:
o GSTR-2A is only a facilitation tool, not a final proof.
o If buyer has valid invoices, has paid supplier, and received goods →
ITC cannot be denied.
o Dept must first proceed against supplier before penalizing
buyer.
SC dismissed Revenue’s SLP, letting HC order stand.
Why it helps buyer: Protects genuine buyers; shifts liability to supplier.
Arise India Ltd. v. Commissioner of Trade & Taxes (Delhi HC, 2017)
Facts: Under Delhi VAT law, buyer’s ITC was denied because seller hadn’t
deposited tax with Govt.
Court’s ruling:
o Provision making buyer responsible for seller’s default was
unconstitutional.
o Buyer cannot be expected to ensure seller’s compliance with tax
law.
SC: Revenue’s SLP was dismissed → judgment final.
Why it helps buyer: Laid foundation that purchaser cannot be
penalized for seller’s default – directly applicable in GST disputes.
On Quest Merchandising India Pvt. Ltd. v. Govt. of NCT of Delhi (Delhi
HC, 2017)
Facts: ITC was denied on grounds that supplier was bogus and had not
deposited VAT.
Court’s ruling:
o If purchaser proves (a) possession of invoices, (b) receipt of goods,
and (c) payment to supplier → ITC cannot be denied.
o Authorities should target fraudulent supplier, not bona fide buyer.
Why it helps buyer: Strengthens principle of innocent purchaser
protection.
LGW Industries Ltd. v. Union of India (Calcutta HC, 2021)
Facts: ITC was denied simply because supplier hadn’t filed proper returns.
Court’s ruling:
o ITC cannot be denied to buyer merely on non-filing by supplier.
o Buyer must show documents: invoice, goods received, bank
payment.
Why it helps buyer: Reinforces that documentary proof is enough for
buyer to claim ITC.
Kalinga Commercial Corporation v. Union of India (Orissa HC, 2022)
Facts: ITC denied because supplier didn’t upload invoices in GSTR-1.
Court’s ruling:
o This is unjust to buyers.
o Department should recover from defaulting supplier first.
Why it helps buyer: Directly says – “Department must go after supplier,
not buyer.”
D.Y. Beathel Enterprises v. State Tax Officer (Madras HC, 2021)
Facts: ITC reversed against buyer since supplier didn’t pay GST to Govt.
Court’s ruling:
o Before penalizing buyer, the officer should first proceed against
the seller.
o Only if seller is untraceable/insolvent can recovery be made from
buyer.
Why it helps buyer: Practical guideline – department cannot take “easy
way out” by targeting buyer first.
Siddharth Enterprises v. Nodal Officer (Gujarat HC, 2019)
Facts: Transitional ITC (from VAT to GST) was denied due to procedural
lapse.
Court’s ruling:
o ITC is a vested right, part of property of taxpayer.
o Arbitrary denial violates Article 300A (right to property) of
Constitution.
Why it helps buyer: Establishes ITC as a constitutional right, not mere
concession.
Bharti Telemedia Ltd. v. Union of India (Delhi HC, 2020)
Facts: Buyer denied ITC because supplier defaulted in depositing tax.
Court’s ruling:
o ITC cannot be denied if buyer fulfilled Section 16(2) conditions.
o Shifting burden of supplier’s default on buyer is against GST
scheme.
Why it helps buyer: Protects genuine buyers who did everything legally
required.