If you’re conducting 9/9C reviews, here’s a critical insight:
Denying Input Tax Credit (ITC) to a bona fide buyer because the seller defaulted violates Article 14 – the Right to Equality.
Tax authorities should pursue the defaulting seller, not punish compliant businesses.
Judicial Clarity on ITC Rights
Recent and past rulings have reinforced this principle:
✅ Supreme Court – Shanti Kiran India (P) Ltd. (2025)
ITC cannot be denied if tax is paid on a valid invoice, even if the seller fails to deposit it. ITC is a statutory right, not a concession.
✅ Arise India Limited (2018)
Treating guilty and innocent purchasers alike is unconstitutional. Buyers cannot predict seller defaults.
✅ Quest Merchandising (2017)
ITC denial is valid only if collusion or fraud is proven.
Tagged with:
About the Author
anky
Professional Chartered Accountant with expertise in taxation, financial planning, and business advisory services. Committed to helping businesses and individuals achieve their financial goals through personalized solutions and expert guidance.
