The GSTAT ruling on Bhandari Scrap and Safecon affirms clarifications on GST ITC eligibility, particularly regarding supplier tax defaults and the applicability of Section 74 for fraud proceedings.
Bhandari Scrap & Safecon Clarify GST ITC Eligibility and Fraud Limits
The Goods and Services Tax Appellate Tribunal (GSTAT) recently ruled on the matters concerning Bhandari Scrap and Safecon, providing critical clarity on the eligibility for Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime. The ruling specifically addresses the implications of a supplier's tax default on the recipient's eligibility to claim ITC.
The GSTAT noted that if the supplier fails to deposit the tax collected from the recipient, the recipient's right to claim ITC remains intact under certain conditions. Additionally, the GSTAT provided further guidance on the limitations imposed by Section 74 regarding fraud proceedings, suggesting that mere defaults by suppliers should not automatically lead to the denial of ITC to buyers unless clear fraud is established.
This decision is significant for practitioners as it delineates the boundaries of responsibility between suppliers and recipients in the context of GST compliance, potentially changing the approach towards ITC claims in cases of supplier defaults.
Citations
- Bhandari Scrap & Safecon (2026) GSTAT
