Singhal Iron Traders Vs Additional Commissioner And Another (Allahabad High Court)
Allahabad High Court in Singhal Iron Traders v. Additional Commissioner & Another (2025) set aside tax and penalty orders issued under Section 74 of the GST Act, holding that Input Tax Credit (ITC) cannot be denied when purchases were made from a validly registered supplier who had paid tax at the time of transaction.
The petitioner, a proprietorship engaged in trading iron scrap, purchased goods worth ₹44.26 lakh (including ₹6.75 lakh GST) from M/s Shiv Iron Trading Co., Agra, between February and March 2019. The supplier was a registered dealer at the time, issued valid tax invoices and e-way bills, and filed GSTR-1 and GSTR-3B returns reflecting the transactions. However, the tax department later initiated proceedings under Section 74, alleging that the supplier’s registration was subsequently cancelled on April 30, 2019, and that the firm was later found non-existent. The Assistant Commissioner reversed the petitioner’s ITC and imposed a penalty equal to the ITC amount, which was upheld in appeal.
The Court found that the petitioner had discharged all legal obligations — payments were made through banking channels, purchases were supported by invoices and e-way bills, and no allegation of fraud or misrepresentation was established. It emphasized that GSTR-3B returns can be filed only after payment of due taxes; hence, once the supplier had filed returns and paid tax, the petitioner’s ITC claim could not be invalidated merely because the supplier was later deregistered.
