VAT ITC Denied Due to Supplier’s Registration Cancellation: Madras HC Remits Case for Reassessment

The Madras High Court remitted a case involving denial of VAT Input Tax Credit (ITC) due to cancellation of a supplier’s GST registration for reassessment. The court ruled that the ITC should not be denied solely because the supplier’s registration was canceled, as long as the taxpayer was able to show that they had fulfilled all other conditions for availing ITC. The case centered on whether the taxpayer should be penalized for transactions with a supplier whose registration had been canceled. The High Court emphasized that the denial of ITC without adequate reassessment could be unfair, especially when the taxpayer had paid the tax in good faith. The case was sent back to the authorities for further examination in light of these observations.