Answer

1. F

   Facts

   A supplier's retrospective cancellation does not by itself mean you lose ITC. Courts have protected genuine buyers where the supplier was registered on the invoice date and the purchase is proved. But you must be able to show the transaction was real.

2. P

   Provisions and law

   • Sec 16(2)(c), CGST Act 2017ITC is allowed only if the tax charged has actually been paid to the Government by the supplier
   • Sec 155, CGST Act 2017The burden of proving eligibility for ITC lies on the person claiming it
   • Rule 21, CGST Rules 2017Registration can be cancelled if the person issues invoices without supply or does not conduct business from the declared place
3. A

   Analysis

   In October 2026 the Punjab and Haryana High Court said Sec 16(2)(c) and Sec 155 should not be applied mechanically, and that supplier default or retrospective cancellation alone does not justify denial. The Supreme Court in 2025 took a similar view under Delhi VAT. Example: you bought Rs 12 lakh of goods in June, supplier cancelled in December from April; your e-way bills, transport receipts and bank proof are your defence.

4. C

   Conclusion

   1. 1Check the supplier's status and the effective date of cancellation on the portal
   2. 2Stop further purchases from that supplier
   3. 3Collect invoice, e-way bill, transport and bank proof for every purchase
   4. 4Check whether the supplier filed GSTR-3B for those months
   5. 5If a notice comes, reply with the proof and case law through a professional

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.