Sahil Enterprises v. Union of India
The condition is constitutional but was read down against a genuine non-collusive purchaser on this record; fraud or collusion remains disqualifying.
By CA Nikhil Gupta · Reviewed against the retained judgment 2026-09-26
The condition is constitutional but was read down against a genuine non-collusive purchaser on this record; fraud or collusion remains disqualifying. Demand order of 7 May 2022 set aside and credit directed to be allowed.
What happened
The purchaser claimed ₹1,11,60,830 in GST credit for a genuine purchase, while its selling dealer failed to remit collected tax.
Questions before the court
- Does seller default by itself defeat the bona fide buyer’s input credit under section 16(2)(c)?
Why the court ruled this way
The condition is constitutional but was read down against a genuine non-collusive purchaser on this record; fraud or collusion remains disqualifying.
Controlling point
The condition is constitutional but was read down against a genuine non-collusive purchaser on this record; fraud or collusion remains disqualifying.
Order and next steps
Demand order of 7 May 2022 set aside and credit directed to be allowed.
Practical implications
The operative result is case-specific: Demand order of 7 May 2022 set aside and credit directed to be allowed. Apply it within the court’s stated limit: A later Supreme Court petition challenges this interpretation; its status must be checked before reliance.
Limits of this ruling
- A later Supreme Court petition challenges this interpretation; its status must be checked before reliance.
Law and judgment source
- CGST Act, 2017, section 16(2)(c)
- constitutional input tax credit
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Source checked: 2026-09-26 · Judgment paragraphs: paragraphs 50–57 · Later case history: later history recorded. A later review or appeal was located; the disclosed subsequent proceeding must be checked for its current outcome.
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