Goods And Services Tax

I. SUPREME COURT

81. (2025) 35 Centax 222 (S.C.) Commissioner Trade and Tax Delhi vs. Shanti Kiran India (P) Ltd. dated 18.12.2025

ITC cannot be denied to a bona fide purchaser when seller was registered on the date and transactions were genuine, even if seller’s registration is cancelled subsequently on account of non-payment of tax to Government.

(Editor’s Note: While the below judgement pertains to Delhi VAT, important principles emanating from it are likely to be relevant for GST law. Accordingly, this case has been considered in this feature).

FACTS

Respondent was a registered dealer under the Delhi Value Added Tax Act, 2004, who purchased goods from registered selling dealer and paid VAT as charged in valid tax invoices. At the time of the transactions, the selling dealers were duly registered; however, their registrations were cancelled subsequently for failure to deposit the tax collected with the Government. Despite the genuineness of the transaction, the petitioner sought to deny ITC to the respondent on the ground that the selling dealers had defaulted in tax payment. The Delhi High Court allowed ITC to the respondent, holding that bona fide purchasers cannot be penalised