Himalaya Communication Pvt. Ltd. Vs Union of India
Date: June 5, 2025
Subject Matter
ITC cannot be denied based solely on the retrospective cancellation of supplier's registration
Summary
The case involves Himalaya Communication Pvt. Ltd. (the Petitioner) challenging the denial of Input Tax Credit (ITC) based solely on the retrospective cancellation of their supplier's GST registration. The High Court of Himachal Pradesh found that the Respondents (Union of India and others) had denied the ITC claim without evaluating the genuineness of the underlying transaction. The Court noted that the Petitioner had duly paid tax to the supplier, possessed all necessary documentation, and that the supplier had filed their GSTR-3B return indicating that the tax liability was discharged. - The Court ruled that before denying ITC under Section 16(2), there must be a comprehensive examination of the transaction's authenticity based on relevant documents, not just an assumption based on the retrospective cancellation of the supplier's registration. The High Court set aside the orders denying the ITC and remanded the matter back to the Adjudicating Authority for a fresh evaluation of the case. The Court emphasized that a proper examination of the transaction is essential before any denial of ITC can be made.
FULL TEXT OF THE JUDGMENT/ORDER OF HIMACHAL PRADESH HIGH COURT
The instant petition has been filed for grant of the following reliefs:-
“i) For issuance of a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ or direction calling for the records pertaining to the Petitioners’ case and after going into the validity and legality thereof to quash and set aside the impugned orders passed by Respondent No. 3 & 4 issued for denying the Input tax credit to the petitioner.
ii) This Hon’ble Court be pleased to issue a Writ of Mandamus directing the respondents to allow the Input Tax Credit claimed by the petitioner for the relevant period as the impugned orders dated 10.01.2025 and 31.03.2024 issued by Respondent No. 3 & Respondent No. 4 respectively were issued without appreciating the Registrar factual and legal position as the petitioner has already paid tax to the seller and has in his possession all the documents required for claiming the ITC and the that supplier has already discharged its tax liability as evidenced by GSTR-3B filed by him for the relevant month.”
2. The sole ground on which the input tax credit claimed has been denied to the petitioner is that the supplier GST registration has been cancelled with retrospective effect. However, there is no material on record indicating that either the Assessing Officer or the Appellate Authority has considered whether the transaction in question was genuine and straightaway notice under Section 16(2) of the CGST Act has been issued.
3. We are of the considered view that before taking any action in the matter, considering the genuineness of the transaction, the same could have been determined only after examining all the relevant documents, which does not appear to have been done in the instant case.
4. Consequently, the present petition is allowed on this ground alone and the impugned orders dated 10.01.2025 and 31.03.2024 issued by respondents No.3 and 4 are set aside. The matter is remanded back to the Adjudicating Authority, who shall decide the matter after examining all the relevant documents. The parties to appear before the said authority on 20.06.2025.
5. The writ petition is disposed of in the aforesaid terms, so also the pending applications, if any.
Notes:
1 Whether the reporters of Local Papers may be allowed to see the judgment? Yes.