The Allahabad High Court has ruled that a purchaser cannot be denied the benefit of Input Tax Credit (ITC) or refund claims solely on the ground that the supplier’s registration was cancelled subsequently, provided the supplier was validly registered at the time of the transaction.
Justice Piyush Agrawal allowed the writ petition filed by Adboulevard Media Private Limited, quashing the orders of the State Tax authorities that had rejected a portion of the petitioner’s refund claim.
Background of the Case
The petitioner, Adboulevard Media Private Limited, is a registered company primarily engaged in the business of digital and online advertising. For the period between April 2024 and June 2024, the petitioner moved an application for a refund of ITC on October 24, 2024.
Following a show cause notice issued on December 21, 2024, and the petitioner’s reply, the respondent authority passed an order on December 28, 2024. The authority partially approved the claim to the tune of Rs. 8,79,233 out of the total claimed refund of Rs. 14,74,910. The balance amount was rejected on the ground that the supplier firm, M/s Addtech Infinium Pvt. Ltd., was “untraceable.”
The petitioner challenged this rejection in an appeal, which was dismissed by the Additional Commissioner, Grade-2 (Appeal) First, State Tax, Meerut, vide order dated July 1, 2025. Aggrieved by these orders, the petitioner approached the High Court.
Arguments of the Parties
Appearing for the petitioner, counsels Mr. Rajat Aren and Mr. Raj Kumar Singh submitted that the petitioner had carried out transactions for inward supply with the supplier during the period in question when the supplier’s registration was active. They pointed out that the supplier’s registration was cancelled subsequently on November 6, 2024.
The counsel argued that “subsequent cancellation of supplier’s registration does not make the purchaser’s claim of ITC as fraudulent / invalid for a transaction which was done during the period when the said firm was active and registered.” It was further submitted that the transaction was supported by valid tax invoices, proofs of payment, and ledger entries.
The petitioner relied upon the judgment of the Supreme Court in Commissioner Trade Tax Vs. Shanti Kiran India Pvt. Ltd. ((2025) 147 GSTR 235) and the Allahabad High Court’s decision in M/s Solvi Enterprises Vs. Additional Commissioner.
Per contra, Mr. Ravi Shanker Pandey, learned Additional Chief Standing Counsel (ACSC) for the State-respondents, supported the impugned orders.
Court’s Analysis
Justice Piyush Agrawal perused the records and noted that “it is not in dispute that at the time when the transaction took place, the purchaser i.e. the petitioner and the seller firm both were registered.”
The Court observed that although the seller was subsequently found non-existing and its registration cancelled, a supplementary affidavit brought on record revealed that the cancellation of M/s Addtech Infinium Pvt. Ltd. had been revoked and proceedings dropped on January 16, 2025.
The Court held:
“Once the registration has been restored, no adverse inference can be drawn that the parties were not registered dealer.”
Referring to the Supreme Court’s decision in Shanti Kiran India Pvt. Ltd., the Court quoted:
“The High Court vide impugned judgment and order(s) found respondent(s) bona fide purchaser dealer(s) who had paid taxes in good faith to registered seller dealer(s) and, therefore, entitled to the benefit of ITC and, accordingly, allowed the said benefit to them after due verification of invoices.”
The Court also cited its own ruling in M/s Solvi Enterprises, which held that if a seller’s registration is cancelled retrospectively and not from inception, it shows the transaction was valid at the time it occurred. That judgment further noted that under the GST regime, authorities ought to verify details available on the GST portal regarding tax deposits by the seller.
Decision
In view of the facts and the settled law, the High Court held that “the impugned orders cannot be sustained in the eyes of law.”
The Court allowed the writ petition and quashed the order dated July 1, 2025, passed by the Additional Commissioner, Grade-2 (Appeal) First, and the order dated December 28, 2024, passed by the respondent authority.
The Court directed:
“Any amount deposited in pursuance of the impugned orders shall be refunded to the petitioner in accordance with law.”
Case Details:
Case Title: Adboulevard Media Private Limited Versus Additional Commissioner, Grade-2(Appeal) First, State Tax, Meerut And Another
Case No: Writ Tax No. 6707 of 2025
Bench: Justice Piyush Agrawal
Counsel for Petitioner: Rajat Aren, Raj Kumar Singh
Counsel for Respondent: C.S.C., Ravi Shanker Pandey (ACSC)
