1.1 Brief of the Case

1.2 Background of the case

Himalaya Communication claimed ITC on procurement of goods/services. GST authorities denied the ITC solely because the supplier’s GST registration was retrospectively cancelled. The petitioner paid tax, possessed invoices, and the supplier had filed GSTR‑3B. No inquiry was made into whether the transaction was genuine

1.3 Key Provisions discussed

• Section 16(2), CGST Act – Conditions for availing ITC; requires genuineness of transaction
• ARTICLE 226, Constitution of India – Writ jurisdiction

1.4 Petitioner’s Arguments

• Retrospective cancellation of supplier registration does not nullify a genuine transaction
• The petitioner had all required documentation and paid the tax
• Supplier discharged its liability and filed returns
• ITC denial without verifying genuineness and authenticity was unjust and arbitrary.

1.5 Respondent’s Arguments

Authorities contended that cancellation of supplier’s GST registration voided the credit claim. They did not proceed to evaluate the transaction’s genuineness, claiming cancellation was sufficient ground.

1.6 Court’s Findings and Analysis

• Noted that denial of ITC was based only on retrospective cancellation
• Emphasized that Section 16(2) requires examination of genuineness before denial
• Criticized authorities for issuing notice without assessing authenticity of documents and transactions

1.7 Court’s Decision

• Quashed impugned orders dated January 10, 2025 and March 31, 2024
• Remanded the matter to GST Adjudicating Authority for fresh inquiry into genuineness, based on documents
• Directed parties to appear before the authority on June 20, 2025

1.8 Significance of the Judgment

• Reaffirms that ITC cannot be denied merely due to supplier registration cancellation
• Mandates adjudicators to evaluate genuineness of transaction per Section 16(2)
• Strengthens taxpayer protection by preventing mechanical credit denial
• Aligns with principles of natural justice under Article 226

1.9 Conclusion

The Court emphasized that credit denial must be supported by a substantive inquiry into genuineness—mere supplier woes won’t suffice. The case reinforces the statutory safeguards under the CGST Act, ensuring fair treatment of taxpayers.