TaxSavvy

Compliance Pack

Supplier due diligence: GSTIN, filing history, 2B and IMS match, red flags

  • If your supplier turns out to be fake or does not pay the GST you paid him, the department can take back your credit with interest and penalty.
  • Deadline: Before the first purchase from a new supplier; re-check each quarter and before any large purchase
  • Done in 5 working days for the first review of up to 25 suppliers
  • Prepared by your Savvy, checked by a CA
  1. Supplier list with GSTINs
  2. How did you find this supplier
  3. Search each GSTIN on the portal
  4. Supplier risk register with ratings
The law and the stepsPay and start · ₹2,999Before onboarding a supplier, then quarterly, + 18% GST

Answer in brief

If your supplier turns out to be fake or does not pay the GST you paid him, the department can take back your credit with interest and penalty. We check each supplier on the GST portal, watch their filing record and 2B data, flag warning signs, and build a proof file for every purchase so you can show you bought genuine goods from a genuine business.

Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.

From the official sources

What the law says, and what trips people up

From the official portal's manuals and FAQs, with the source for each point.

The law

  • CGST Act 2017, Sec 16(2)(c)

    ITC only if the tax charged has actually been paid to the Government by the supplierSource

  • CGST Act 2017, Sec 155

    Burden of proving an ITC claim lies on the person claiming it; mere invoices may not be enough (Ecom Gill Coffee Trading, SC 2023)Source

  • Shaurya Alloys v State of Punjab (Punjab and Haryana HC, 1 October 2026)

    Sec 16(2)(c) and 155 upheld but not to be applied mechanically; supplier default or retrospective cancellation alone does not justify denial; buyer can discharge burden with invoices, e-way bills, transport and stock recordsSource

  • Commissioner of Trade and Tax v Shanti Kiran India (SC, 9 October 2025, under DVAT)

    Bona fide purchaser not denied credit for seller's default where seller was registered on the transaction date, absent collusionSource

  • CGST Act 2017, Sec 16(2), second proviso

    Pay the supplier within 180 days of invoice or reverse ITC with interestSource

  • CGST Rules 2017, Rule 86A

    Credit can be blocked where the supplier is non-existent, goods were not received or tax was not paidSource

  • CGST Act 2017, Sec 122(1) and 122(1A)

    Penalty on invoices without supply and wrongful ITC; Sec 122(1A) also reaches the person who retains the benefitSource

  • CGST Act 2017, Sec 132

    Fake invoices and ITC on them are offences, with imprisonment by amount slabs; above ₹5 crore cognizable and non-bailableSource

  • Government fee

    No government fee. Portal taxpayer search is free before login. Source: https://gsthero.com/gst-verification-identifying-bogus-and-genuine-supplier-under-gst

On the portal

  1. gst.gov.in > Search Taxpayer > Search by GSTIN/UIN (no login needed); enter GSTIN and captcha
  2. Read legal and trade name, effective date of registration, constitution, status, taxpayer type, principal place, Aadhaar authentication and e-KYC status, nature of business
  3. Click Show Filing Table to see GSTR-1 and GSTR-3B filing dates for recent periods
  4. Search by PAN to see all GSTINs of the same PAN and their status
  5. After login, check IMS each month for the supplier's records and keep remarks on rejected or pending items

What trips people up

  • Supplier cancelled retrospectively after you claimed ITC

    Keep transaction proof (e-way bill, bank, stock); courts protect bona fide buyers where the supplier was registered on the invoice dateSource

  • GSTIN valid but belongs to another branch or State

    Check State code and legal name match; do not book until confirmedSource

  • Composition dealer charged GST on the bill

    No ITC on a bill of supply; ask for correctionSource

  • Invoices alone produced in defence and rejected

    Show vehicle details, freight payment, delivery acknowledgement and bank payment as wellSource

  • Credit blocked under Rule 86A because a supplier was found non-existent

    Submit proof of receipt and payment to the blocking officer; see GST-ITC-11Source

People ask

Is checking that the GSTIN is active enough?

No. Also check filing history, address and that goods actually moved; courts look for proof of the transaction.Source

If my supplier did not pay the tax, do I always lose ITC?

Not automatically. The P and H High Court in October 2026 said it cannot be denied mechanically; the buyer must show a genuine purchase.Source

How often should I re-check suppliers?

Regular suppliers at least once a quarter; new or high-value ones before each purchase cycle.Source

How big is the fake ITC problem?

CGST reported about ₹74,782 crore in 30,162 fake ITC cases in FY 2025-26.Source

How does the department detect fake suppliers?

Through data analytics, GSTR-1 vs 3B and 2B vs 3B checks, physical verification and Aadhaar authentication.Source

IDFD

How we solve it: 4 steps

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Step 1 of 4 · What we need from you

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  • Supplier list with GSTINs
  • Supplier PAN and KYC papers
  • Purchase invoices and e-way bills
  • Transport and freight receipts
  • Goods receipt and stock records
  • Bank payment proof to supplier
  • Monthly GSTR-2B and IMS data

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₹2,999

₹2,999 + ₹539.82 GST = ₹3,538.82

Before onboarding a supplier, then quarterly. Delivered in 5 working days for the first review of up to 25 suppliers. Due: Before the first purchase from a new supplier; re-check each quarter and before any large purchase

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