Tax Invoice by Cancelled Supplier Invalidates ITC Claim

Case Title: M/s Raman Metal Works v. Additional Commissioner and Another
Court: High Court of Judicature at Allahabad
Petition No.: Writ Tax No. 3 of 2022
Neutral Citation: 2025:AHC:56217
Date of Judgment: 16.04.2025
Category of Dispute: Penalty & Detention of Goods – Invalid E-Way Bill / Cancelled Supplier Registration
Relevant Sections/Rules: Section 129(1) CGST Act, 2017; Rule 138 of UP GST Rules, 2017

Facts of the Case (Paras 3–5)

• The petitioner, M/s Raman Metal Works, a registered firm engaged in the business of lead ingots, purchased goods from M/s Agrawal Metal and arranged transportation (Para 4).

• On 02.12.2020, the truck carrying lead ingots was intercepted by the Assistant Commissioner (Mobile Squad), Etah (Para 4).

• Although the goods were accompanied by a tax invoice and valid e-way bill, it was found that the supplier’s GST registration had been cancelled on 07.11.2020, prior to issuance of invoice and e-way bill dated 01.12.2020 (Para 5).

• Penalty proceedings under Section 129(1) CGST Act were initiated, and the petitioner’s appeal was dismissed by the Additional Commissioner (Para 5).

Question(s) in Consideration (Paras 6–7)

• Whether goods accompanied with invoice and e-way bill issued by a supplier whose registration stood cancelled prior to supply are valid for compliance under GST.

• Whether the detention and penalty imposed under Section 129(1) were sustainable despite possession of invoice and e-way bill.

Observations of the Court (Paras 9–11)

• Rule 138 of the 2017 Rules mandates that goods in transit must be accompanied by valid tax invoice and e-way bill (Para 9).

• In this case, though documents existed, the supplier firm had already ceased to exist legally after cancellation of registration on 07.11.2020 (Para 10).

• Consequently, any invoice dated 01.12.2020 issued by such supplier was sham and invalid, rendering the transaction itself against the mandate of GST law (Para 11).

Judgment of the Court (Paras 12–13)

• The Court upheld the order of the appellate authority and held that the penalty order required no interference.

• The writ petition was dismissed (Para 13).

Between Fine Lines

This judgment clarifies that invoices and e-way bills issued by a supplier after cancellation of GST registration are non est in law. Even if a purchaser carries valid documents, the transaction will be treated as sham, making goods liable for detention and penalty. Purchasers must verify the GST registration status of suppliers before procurement.

Summary of Referred Cases

(No external precedents referred in judgment – case solely decided on statutory provisions.)

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