R. N. Garg And Sons Vs Union of India & Ors. (Delhi High Court)
The petition before the Delhi High Court challenged an order dated 18.04.2024 and a show cause notice dated 11.12.2023 issued under Section 73 of the CGST/DGST Acts. The petitioner sought quashing of the impugned order and notice, primarily on the ground that Input Tax Credit (ITC) had been wrongly denied due to retrospective cancellation of suppliers’ GST registrations.
The petitioner was registered under GST from 30.11.2017, and its registration was later suspended on 18.11.2022. A show cause notice proposed a demand of ₹33,05,034 alleging incorrect declaration of tax liability in annual returns (GSTR-9). The basis of the demand was that ITC had been availed from suppliers whose GST registrations were cancelled prior to the invoice dates. The notice referred to Section 16(2)(c) of the CGST Act, which restricts ITC where tax has not been deposited by the supplier.
The petitioner contended that it had complied with all statutory conditions under Section 16 and had furnished supporting documents such as tax invoices, proof of receipt of goods/services, bank statements, and GSTR-2A. It argued that the transactions were genuine and conducted when the suppliers’ registrations were active. It was further submitted that retrospective cancellation of suppliers’ registrations cannot invalidate ITC already availed. The petitioner also relied on judicial precedents to support its position.
