The Hon’ble Punjab and Haryana High Court in Shaurya Alloys Pvt. Ltd. v. State of Punjab and Another [CWP No. 34296 of 2024 (O&M) and connected matters dated October 01, 2026] disposed of a batch of 424 writ petitions challenging the vires of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) and upheld the constitutional validity of the provision, but held that Section 16(2)(c) read with Section 155 of the CGST Act cannot be construed as a standalone provision so as to mechanically saddle the purchasing dealer with reversal of Input Tax Credit (“ITC”) merely because the supplier has failed to deposit the tax or its registration has been cancelled retrospectively. The Hon’ble High Court, after considering the rulings in Bhandari Scrap Traders, Sahil Enterprises, G.R. Infra Projects and Tata Steel, laid down fourteen binding guidelines governing the invocation of Section 16(2)(c) of the CGST Act by the proper officers and directed that all the show cause notices and orders under challenge be decided afresh in the light of those guidelines.
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