Introduction

This judgment reiterates the principles laid down by the Kerala High Court in M. Trade Links v. Union of India (2024 KLT Online 1624) regarding denial of Input Tax Credit (ITC) where suppliers become untraceable. The Court held that an assessee should not be denied ITC without first being granted an opportunity to establish the genuineness of the transactions by producing the documents contemplated in the departmental circulars referred to in paragraph 101 of M. Trade Links.

Accordingly, the Court set aside the assessment order to the limited extent of ITC disallowance and granted the petitioner one final opportunity to produce supporting documents.