Archive · 9 Jan 2026
Tripura HC Allows ITC for Bona-Fide Purchasers
The Tripura High Court has ruled that Input Tax Credit (ITC) cannot be denied to a buyer who has made a genuine purchase, even if the seller has not paid the tax to the government.
The court said that as long as the buyer has a valid tax invoice and has taken all reasonable precautions, they should not be penalized for the seller's failure to pay taxes.
This decision provides relief to honest taxpayers.
However, experts believe that the Supreme Court might have the final say on this matter, as other High Courts have upheld the constitutional validity of the section in question.
Tripura High Court ruled that ITC cannot be denied to bona-fide purchasers even if the supplier has not deposited the tax.
The court held that Section 16(2)(c) of the CGST Act should not be used to deny ITC to purchasers in genuine transactions.
The petitioner, a trader of rubber products, had availed ITC on goods purchased from a supplier who failed to deposit the tax.
The court observed that the legislature did not distinguish between bona-fide purchasing dealers and those involved in fraudulent transactions.
Experts suggest that the matter is likely to be settled by the Supreme Court, as other High Courts have upheld the constitutional validity of Section 16(2)(c).
- Who
- Tripura High Court, Petitioner (trader of rubber products), Supplier (Sentu Dey)
- What
- Ruling on Input Tax Credit (ITC) under CGST Act
- When
- Ruling on January 6, 2026; Published on January 9, 2026
- Where
- Tripura High Court, India
- Why
- To determine if ITC can be denied to a bona-fide purchaser due to supplier's default in tax payment
- Court
- Tripura High Court
- Section Involved
- Section 16(2)(c) of the CGST Act
- Petitioner's Business
- Trading of rubber products
- Key Articles
- Articles 14, 19(1)(g), 265, 300-A of the Constitution of India
- Expert Opinion
- Harpreet Singh, Partner with Deloitte
- Date of Ruling
- January 6, 2026
- Publication Date
- January 9, 2026