Supreme Court Sets a Landmark Precedent on Input Tax Credit (ITC)
In a significant ruling, the Hon'ble Supreme Court in Commissioner of Trade & Tax, Delhi vs. M/s Shanti Kiran India (P) Ltd. has reaffirmed a vital principle under indirect tax law: a bona fide purchaser cannot be denied Input Tax Credit merely. because the supplier fails to deposit tax with the government.
Professional comment by Adv. Ashish kamthania, LLM
The Court held that where a taxpayer has: Purchased goods from a duly registered supplier Paid tax against valid tax invoices Acted in good faith and with due diligence
the entitlement to ITC cannot be curtailed due to non-compliance on the part of the supplier.
Key Takeaways from the Judgment: Genuine businesses
should not suffer for defaults beyond their control- ITC is recognized as a vested and constitutionally protected right. Tax authorities must initiate action against the actual defaulters, not penalize compliant purchasers
This ruling brings much-needed clarity to ongoing GST disputes and reinforces the trust-based framework of India's indirect tax regime. It offers reassurance to businesses that have long faced uncertainty over supplier-related defaults.
Comment Ashish Kamthania: "This judgment is a welcome and much-needed affirmation of taxpayer rights. It strengthens the foundational principle that compliance by an honest buyer cannot be undermined by failures of a third party. The decision will go a long way in restoring certainty, fairn
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