Section 16(2)(c)

Bona Fide Buyer, Defaulting Seller: Calcutta High Court Curbs the Mechanical Use of Section 74 to Deny GST Input Tax Credit

A logistics company claimed input tax credit on invoices from a supplier who later stopped filing returns. The department invoked Section 74's fraud-based extended period to raise a Rs. 6.3 crore demand two years after ordinary limitation had run out. The Calcutta High Court quashed the order, applying binding precedent that a buyer's credit cannot be held hostage to a seller's default, and that dressing up an ordinary demand as fraud does not extend the clock.