Bhandari Scrap Traders v. Union of India & Ors., SLP(C) No. 23931 of 2026, 24 July 2026.

The Supreme Court upheld the Gujarat High Court’s judgment upholding the constitutional validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017. The Court held that ITC is a statutory benefit, and not an absolute or vested right of the purchasing dealer, and therefore it can be made subject to conditions prescribed by the GST legislation.

The Court rejected the argument that Section 16(2)(c) should be read down so that ITC could be denied only in cases involving fraud or collusion. It also approved the Gujarat High Court’s interpretation of the GST framework, including Sections 41, 73 and 74 of the CGST Act, under which ITC reversed because of the supplier’s non-payment of tax may be re-availed once the supplier subsequently discharges the tax liability.

The Court distinguished the GST regime from the Delhi VAT Act and held that the principles applicable to bona fide purchasing dealers under the Delhi VAT regime could not be imported into the CGST framework. Thus, the decision is significant for GST and indirect tax law, particularly the conditions governing ITC, the supplier’s actual payment of tax, reversal and re-availment of ITC, and the statutory nature of the right to claim ITC.

Last Updated on 9 September, 2026