Summary
- The Karnataka High Court has ruled that input tax credit (ITC) cannot be denied to genuine buyers due to supplier defaults, marking a significant development in GST jurisprudence.
- In M/s Instakart Services Private Limited v. Union of India, the Court upheld the constitutional validity of Section 16(2)(c) but read it down to protect bona fide transactions.
- The ruling emphasizes that ITC denial should only apply in cases of non-genuine transactions, preventing undue hardship on compliant taxpayers.
- This judgment is set to influence future litigation and departmental actions regarding ITC disputes linked to supplier compliance failures.
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