An infographic explaining the concept of GST input tax credit, showcasing the process of how businesses can claim credit for the taxes paid on their purchases, reducing the tax they need to pay on their sales.

GST Input Tax Credit can't be denied: Diving deeper into the landmark judgement

GST Input Tax Credit: Engineering Tools Corporation v. Assistant Commissioner (ST) [WRIT PETITION NO. 3505 OF 2024 & W.M.P. NOS. 3758 & 3759 OF 2024]

The recent judgement in Engineering Tools Corporation v. Assistant Commissioner (ST) marks a significant development for businesses navigating the complexities of input tax credit (ITC) under the Goods and Services Tax (GST) regime. This article delves deeper into the case, its implications, and relevant legal nuances.


The petitioner, Engineering Tools Corporation, faced a hefty blow when their ITC claims were reversed due to the retrospective cancellation of their supplier’s GST registration for the 2017-2018 period. The authorities deemed the transactions invalid and denied the ITC, despite the company’s insistence on legitimate purchases supported by documented evidence.

Key Takeaways:

  • ITC Denial based on Retroactive Cancellation: Unwarranted: The court ruled that denying ITC solely because the supplier’s registration was retrospectively cancelled is unjustified. This decision protects businesses from unforeseen consequences arising from actions beyond their control.

  • Substantiating claims is crucial. The court emphasised the importance of evidence-based claims. The petitioner’s meticulous documentation, including tax invoices, e-way bills, transport documents, and bank payment proofs, played a pivotal role in upholding their claim.

  • Assessment Order Quashed: The court deemed the assessment order that disregarded the submitted documents as unsustainable and ordered it to be quashed and set aside. This establishes a precedent for similar cases and upholds the principle of fair assessment based on concrete evidence.

Implications and Broader Impact:

This judgement offers reassurance to businesses that demonstrate good faith and maintain proper documentation. It discourages arbitrary denial of ITC based solely on technicalities beyond their control. However, it is crucial to note that:

  • This judgement applies specifically to the given case and its unique circumstances.
  • Businesses must continue to adhere to GST regulations and exercise due diligence while making purchases.
  • Proper documentation remains paramount for claiming ITC and defending claims in cases of dispute.

Additional Considerations:

  • The judgement highlights the need for clarity and consistency in GST regulations to avoid ambiguity and potential misinterpretations.
  • It underscores the importance of transparent and fair assessment procedures that consider all relevant evidence before denying ITC claims.

Moving Forward:

This landmark judgement serves as a beacon of hope for businesses navigating the complexities of GST. It reinforces the importance of proper documentation, good faith compliance, and the right to challenge arbitrary decisions. While the specific details of this case may not be universally applicable, it sets a positive precedent for upholding fairness and transparency in the GST ecosystem.

Read Judgement

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