Madras HC: Recipient cannot Claim ITC when Supplier fails to pay Tax; ITC restored if Supplier subsequently pays

Madras HC dismissed a writ petition challenging denial of ITC on purchases from a supplier who had failed to file GSTR-3B returns and pay the corresponding tax. Relying on the Supreme Court’s decision in Bhandari Scrap Traders, the HC held that ITC cannot be claimed by the recipient where the supplier has not discharged the tax liability. The Court noted that the petitioner did not dispute that the supplier had failed to pay the tax either when the assessment order was passed or thereafter. However, HC clarified that the petitioner would be entitled to ITC if the supplier subsequently pays the tax.