GSTAT issues conflicting rulings on GST Input Tax Credit denials

The Goods and Services Tax Appellate Tribunal (GSTAT) has issued two distinct rulings regarding the denial of Input Tax Credit (ITC) based on the status of suppliers.

In a decision by the Lucknow Bench involving New Star Trading Company, the tribunal upheld the denial of ITC totaling ₹7,69,456. The ruling found that the appellant could not prove the actual physical movement of goods. Investigations revealed that the suppliers were non-existent and that e-way bills contained discrepancies, such as untraceable vehicle registrations and expired permits. While the ITC denial was maintained, the tribunal set aside previous penalties and remanded the matter for fresh determination.

Conversely, the GSTAT Agra Bench ruled in favor of M/s Hema Industries, stating that a bona fide buyer should not lose ITC simply because a supplier is later found to be non-existent. The firm, a manufacturer in Aligarh, had purchased raw materials with valid invoices, e-way bills, and bank statements. The tribunal set aside the order for ITC reversal, emphasizing that valid documentation should protect legitimate buyers from the subsequent non-existence of their suppliers.