Authorities should verify whether a supplier has defaulted on tax payments before reversing the ITC. The Delhi High Court has remanded the matter as there was no proper examination.
The Delhi High Court quashed the Adjudicating Authority’s order for reversing Input Tax Credit (ITC) against Hanuman Industrial Corporation due to a lack of evidence proving supplier defaults in tax payments. The court emphasized the need for clear proof of non-compliance by suppliers under the GST law.
