Case Details: Singhal Iron Traders vs. Additional Commissioner (2025) 36 Centax 81 (All.)
Judiciary and Counsel Details
- Piyush Agrawal, J.
- Shri Suyash Agarwal, Sr. Adv., for the Petitioner.
Facts of the Case
The petitioner, a registered trader in iron scrap, had purchased iron scrap from a registered supplier against invoices and e-way bills. The payments were made through banking channels, and the supplier had filed GSTR-1 and GSTR-3B. A show cause notice was issued under Section 74 of the CGST Act, read with the Uttar Pradesh GST Act, proposing reversal of input tax credit and an equal penalty on the ground that the supplier’s registration had subsequently been cancelled. The petitioner submitted that the purchases were genuine, duly supported by documents, and that no irregularity in transportation or payment had been alleged. The matter was accordingly placed before the High Court.
High Court Held
The Hon’ble High Court held that the subsequent cancellation of the supplier’s registration could not be a ground to reverse input tax credit or impose penalty where the purchases were supported by e-way bills, banking transactions, and return filings by the supplier. It observed that as GSTR-3B could not be generated without payment of tax and no irregularity in transport was alleged, no adverse inference could be drawn merely due to later cancellation of registration. The Court held that the authorities ought to have verified the supplier’s existence at the time of the transactions and that the orders of reversal and penalty were unsustainable. The impugned orders were quashed, and the writ petition was allowed.
