Madras HC Remands Four GST Credit Denials, Says Supplier’s Later Non-Existence Alone Cannot Justify Rejection

The petitioner challenged four orders under Section 74 of the applicable GST enactments concerning tax periods 2022–2023, March 2024, and 2024–2025.

It contended that the assessing officer had not properly considered its replies and supporting documents, including invoices, e-way bills, bank statements, CA certificates, weighbridge receipts, and lorry receipts.

The orders rejected the petitioner’s Input Tax Credit (ITC) claim, reasoning that the documents did not establish receipt of goods because the supplier was found to be non-existent during an investigation in April 2025.

Sections 16 and 155 of the applicable GST enactments govern the entitlement to ITC and the burden of establishing that entitlement; Section 74 provides for determination of tax in cases involving alleged fraud, wilful misstatement, or suppression.

The Court applied the principle that an ITC claim must be assessed on the relevant evidence and circumstances: a supplier’s later finding of non-existence at its declared place of business does not, by itself, justify rejection of the claim for earlier tax periods.

The Court also directed that reconsideration be conducted after a reasonable opportunity and result in a speaking order.

No precedent was cited.

The impugned orders acknowledged the petitioner’s documentary submissions but treated them as insufficient because the supplier was found to be non-existent in April 2025.

Since that investigation occurred after the relevant tax periods, the Court considered it erroneous to reject the ITC claim merely on that basis.

The documents therefore required reconsideration by the assessing officer, rather than the Court determining the petitioner’s ITC entitlement on the merits.

The respondent was directed to provide the petitioner a reasonable opportunity, duly consider all documents submitted, and issue a speaking order within five months of receiving a copy of the judgment.

The writ petitions were disposed of without costs, and the connected miscellaneous petitions were closed.