Supplier later found Non-Existent, not reason for GST ITC Reversal: GSTAT

The Goods and Services Tax Appellate Tribunal determined that a bona fide buyer possessing genuine invoices, e-way bills, and bank statements cannot face input tax credit reversal merely because the supplier was subsequently discovered to be non-existent. The tribunal emphasized the protection of purchasers who exercise due diligence. Under GST law, claiming input tax credit typically requires proof of transaction authenticity, which includes proper documentation and payment trails.

Previously, buyers frequently faced coercive recovery and credit denials when supplying entities vanished or defaulted, creating severe cash flow distress for honest enterprises. Tax practitioners should advise clients to meticulously maintain all supporting transaction documents, including transport records and banking trails, to defend against arbitrary credit reversals.

Professionals must challenge demands arising solely from retrospective supplier profiling. Bottom line: Solid documentation shields your business clients from unwarranted tax disputes.