Seller Registered at Time of Transaction Cannot Draw Adverse Inference Against Purchasing Dealer Over Subsequent GST Cancellation: Allahabad HC

The Allahabad High Court has held that no adverse inference can be drawn against a purchasing dealer regarding Input Tax Credit (ITC) merely because the seller's GST registration was subsequently cancelled, provided the seller was registered at the time of the transaction. The court emphasized that the purchasing dealer cannot be penalized for the subsequent actions or inactions of the seller, especially if the transaction was entered into when the seller had a valid registration. This ruling provides relief to purchasing dealers who have genuinely transacted with registered sellers and have claimed ITC in good faith. It underscores the principle that buyers should not be unduly burdened by the compliance failures of the sellers, particularly retrospectively.