Himalaya Communication Pvt. Ltd. Vs Union of India and others (Himachal Pradesh High Court)
ITC cannot be denied to the Recipient merely because of retrospective cancellation of supplier’s GSTIN without examination of genuineness of the transaction: Himachal Pradesh High Court
Summary: Himachal Pradesh High Court, in the case of Himalaya Communication Pvt. Ltd. v. Union of India & Ors., ruled that Input Tax Credit (ITC) cannot be denied to a recipient solely due to the retrospective cancellation of a supplier’s GST registration. The Petitioner, Himalaya Communication Pvt. Ltd., challenged orders from January 10, 2025, and March 31, 2024, which rejected their ITC claim. The Department’s sole reason for denial was the supplier’s retrospectively canceled GSTIN, without an examination of the genuineness of the underlying transactions. Himalaya Communication contended that they had duly paid tax to the supplier, possessed all necessary documents, and the supplier had filed their GSTR-3B return, indicating tax liability discharge. The Court observed that the Respondents had no material on record to demonstrate an examination of the genuineness of the transactions. It was held that before denying ITC under Section 16(2) of the Central Goods and Services Tax Act, 2017 (CGST Act), authorities must verify the nature of the transaction by examining all relevant documents. As this exercise was not undertaken, the Court set aside the impugned orders and remanded the matter back to the Adjudicating Authority for fresh consideration. This decision underscores that a comprehensive assessment of the transaction’s authenticity is a prerequisite for denying ITC, rather than relying solely on the retrospective cancellation of a supplier’s registration.
