The Madras High Court has ruled that Input Tax Credit (ITC) cannot be denied solely because the supplier is later declared non-existent. The ruling stresses the need for thorough examination of documentary evidence.
Madras HC: ITC Cannot Be Denied Due to Supplier Being Non-Existent
The Madras High Court has set aside a denial of Input Tax Credit (ITC), emphasizing that the absence of proper examination of documentary evidence is a significant factor in ensuring fair treatment of taxpayers. The court noted that an unfavorable order issued under Section 74 followed a procedural show cause notice issued under Section 73, leading to the contentious ruling.
This decision underlines the principle that taxpayer rights should not be compromised based merely on a supplier's subsequent status being declared as non-existent, thereby stressing the importance of documentary verification and careful scrutiny in tax assessments.
Practitioners handling ITC claims should take heed of this ruling as it highlights the critical nature of evidence in supporting taxpayers' claims, reminding them to prepare comprehensive documentation in future assessments.
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