Allahabad High Court: No Adverse Inference Can Be Drawn Against Purchase Made From Seller Whose GST Registration Got Cancelled Subsequently
The Allahabad High Court quashed the impugned Orders related to Goods and Services Tax (GST) proceedings under Section 74 of the UPGST Act.
The Allahabad High Court explained that no adverse inference can be drawn against a purchase made from a seller whose GST registration was cancelled subsequently after a transaction.
The Court quashed the impugned Orders related to Goods and Services Tax (GST) proceedings under Section 74 of the Uttar Pradesh Goods and Service Tax Act, 2017 (UPGST Act) and directed the authority concerned to decide the matter afresh.
A Single Bench of Justice Piyush Agrawal remarked, “Once the seller was registered at the time of the transaction in question, no adverse inference can be drawn against the petitioner. Further, the record shows that the registration of the selling dealer was cancelled retrospectively i.e. w.e.f. 29.01.2020 and not from its inception which goes to show that the transaction between petitioner and seller was registered and having valid registration in his favour.”
Advocate Aditya Pandey appeared for the Petitioner, while Additional Chief Standing Counsel RS Pandey represented the Respondents.
Brief Facts
The Petitioner had challenged Orders passed by the Additional Commissioner Grade 2 related to proceedings under Section 74 of the UPGST/CGST Act. The Petitioner was a registered dealer involved in the sale and purchase of scraps.
The Petitioner argued that he purchased goods from a registered dealer with a tax invoice generated from the GST Portal. It was pointed out that while authorities can cancel registrations retrospectively, in this case, the seller's registration was cancelled after the transaction date. It was also argued that the GSTR-2A form, auto-generated, showed the transaction as genuine.
Court’s Reasoning
The High Court noted, “At the time when the transaction took place, the purchaser i.e. the petitioner and the seller both were registered, however, at the subsequent time, the seller was found non-existing and the registration of the seller has not cancelled retrospectively i.e. from the date of transaction.”
The Bench pointed out, “It is not the case of the Revenue that at the time when the transaction took place, the selling dealer was not registered and was not having valid registration under the GST Act.”
“That under the GST regime, all details are available in the GST Portal and therefore, authorities ought to have been verified the same as to whether the filing of GSTR-1A and GSTR-3B, how much tax has been deposited by the seller, but the authorities have failed to do so,” the Court remarked.
Consequently, the Court ordered, “Accordingly, the impugned orders cannot be sustained in the eyes of law and the same are hereby quashed…The writ petitions are allowed. The matter is remanded to the authority concerned for deciding afresh by passing a reasoned and speaking order, after hearing all the stakeholder, within a period of two months from the date of production of certified copy of this order.”
Accordingly, the High Court allowed the Petition.
Cause Title: M/S Solvi Enterprises v. Additional Commissioner Grade 2 & Anr. (Neutral Citation: 2025:AHC:42270)
Appearance:
Petitioner: Advocate Aditya Pandey
Respondents: Additional Chief Standing Counsel RS Pandey; Advocate Manish Trivedi
