The Goods and Services Tax Appellate Tribunal (GSTAT), Patna Bench, has admitted an appeal involving an important legal question concerning denial of Input Tax Credit (ITC) under Section 16 of the CGST Act, 2017 where the supplier’s GST registration has subsequently been cancelled retrospectively.

The Division Bench comprising Manoj Shankar (Judicial Member) and Sanjay Kumar Mawandia (Technical Member) admitted the appeal after finding that the matter raises a substantial question of law on whether ITC supported by documentary evidence can be denied merely because the supplier’s registration was retrospectively cancelled, particularly where there is no evidence of collusion or fraud.

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The appeal came up before the Division Bench for hearing on admission. The proceedings were conducted through Webex for virtual hearing.

The appellant also brought two issues to the Tribunal’s attention. First, it was submitted that there was a clerical error in the Order-in-Original (OIO). Second, the appellant contended that the Show Cause Notice (SCN) was barred by limitation.

On these grounds, the appellant sought admission of the appeal for hearing on merits.

After examining the case record and the submissions advanced on behalf of the appellant, the Bench noted that the required authorization letter and additional grounds had been uploaded.

More importantly, the Division Bench found that the appeal involved a specific legal question concerning the eligibility of ITC under Section 16 of the CGST Act, 2017.

The question framed by the Tribunal is: “Whether availment of ITC supported by documentary evidence under section 16 of the CGST Act, 2017, can be denied merely on the retrospective cancellation of the Registration of the supplier, in absence of any evidence of collusion or fraud.”

The framing of this issue makes the appeal significant because the Tribunal is specifically examining the relationship between documentary evidence supporting ITC, retrospective cancellation of a supplier’s registration, and the absence or presence of collusion or fraud.

The legal issue identified by the Bench specifically refers to situations where there is no evidence of collusion or fraud.

Thus, the appeal will examine whether a recipient’s ITC claim, when supported by documentary evidence and otherwise claimed under Section 16 of the CGST Act, can be rejected solely because the supplier’s registration was later cancelled with retrospective effect.

The Tribunal has not, at the admission stage, finally decided the entitlement to ITC. Rather, it has found that the issue raised requires adjudication by the Division Bench on merits.

After identifying the legal issue, the GSTAT Patna Bench ordered that the appeal be admitted.

The Tribunal directed issuance of notice to the respondents and granted them six weeks to file cross-objections, if any.

The matter has been listed for further hearing on November 18, 2026.

Apart from the ITC question, the appellant had specifically raised an objection concerning the limitation of the SCN.

The appellant’s Authorized Representative submitted before the Tribunal that the SCN was barred by the applicable limitation period. The appellant also pointed out a clerical error in the Order-in-Original.

These issues form part of the appellant’s submissions at the admission stage, while the Tribunal’s order specifically records the ITC question as the legal point requiring consideration by the Division Bench.

The GSTAT Patna Bench has therefore allowed the appeal to proceed on merits, with the central question being whether documentary evidence supporting ITC can be disregarded merely because the supplier’s GST registration was retrospectively cancelled, where there is no evidence of collusion or fraud.

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