Singhal Iron Traders Vs Additional Commissioner And Another (Allahabad High Court)
GST Section 74 Proceedings Quashed as Supplier’s Post-Transaction Cancellation Cannot Penalize Buyer; ITC Validity Upheld Despite Supplier Deregistration: Allahabad HC Quashes Rs. 1.95 Lakh Penalty; Buyer Not Liable for Supplier’s Post-Sale GST Deregistration – Allahabad HC Judgment; GST Penalty Quashed: Subsequent Supplier Deregistration Cannot Affect Buyer’s ITC; Section 74 GST Action Invalid Without Verification of Supplier Existence at Time of Sale.
Brief facts:
The petitioner was a registered dealer under GST. The purchases were made against valid tax invoices and e-way bills. Payment was made through bank transactions. The supplier had filed GSTR-1 and GSTR-3B returns for the relevant period. Since GSTR-3B cannot be filed without tax payment, it implied that the supplier had deposited the
tax to the government.
Court’s Observations:
The subsequent cancellation of registration of the supplier cannot be used against the petitioner, as the transaction took place when the supplier was active and GST compliant.
The authorities failed to verify the factual position independently before drawing an adverse inference. They acted merely on borrowed information that the supplier was non-existent later. There was no finding that the transport vehicle or e-way bill was fake, which further confirmed the genuineness of the transaction.
