Generally, no—not under the ordinary rule in India’s CGST Act. Section 16(2)(c) makes actual payment of the tax charged on the supply to the Government a condition for ITC, separately from the buyer’s payment of the invoice to the supplier. Court decisions have taken different approaches in disputes involving bona fide buyers, so the outcome of a particular case can depend on its facts, jurisdiction and procedural status.
What the CGST Act requires
Section 16(2) of the Central Goods and Services Tax Act, 2017 sets conditions for a registered person to claim input tax credit. For supplier non-remittance, the central condition is section 16(2)(c): “the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply”. The Act also requires the recipient to furnish the return under section 39 and satisfy the other applicable conditions, including holding the prescribed document and receiving the goods or services. The framework is subject to section 41 of the Act.
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That wording means paying the supplier and holding an invoice do not, by themselves, establish that every condition for ITC has been met. If the supplier collected the GST but did not remit it, the buyer faces a credit risk under section 16(2)(c), even if the underlying purchase was genuine and the invoice was paid.
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Supplier non-remittance is not the 180-day payment rule
These are separate issues with different triggers and consequences:
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| Situation | Relevant rule | What it means for the buyer |
|---|---|---|
| Supplier has not paid the tax to Government | Section 16(2)(c), CGST Act | Actual payment of the tax to Government is a condition for ITC. Payment of the invoice to the supplier does not itself prove that condition. |
| Buyer has not paid the supplier within 180 days from the invoice date | Second proviso to section 16(2), CGST Act; CBIC sectoral FAQ | The credit proportionate to the amount unpaid is added to the buyer’s output tax liability with interest through the prescribed process. The buyer may avail the credit again after paying the supplier. |
The 180-day rule concerns the buyer’s payment to the supplier; it is not a grace period for the supplier to remit GST to Government. CBIC’s FAQ likewise says credit can be reclaimed when the buyer pays the value and tax to the supplier.
What GSTR-2B can—and cannot—tell you
GSTR-2B is a useful reconciliation statement based on information reported by suppliers. Compare it with your purchase ledger, invoices and returns, and investigate missing or mismatched entries. But an invoice appearing in GSTR-2B is not a complete legal safe harbor: it does not establish that all other eligibility conditions have been met, including actual payment of the tax to Government. The GST portal’s advisory also cautions that legal ineligibility may arise for reasons beyond the limited cases shown as unavailable in the statement.
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If an invoice is absent from the relevant recipient statement, check the supplier’s reporting and the rules applicable to the return period. Do not treat the statement alone as proof either that the supplier remitted the tax or that the buyer is entitled to claim the credit.
Can the buyer pay the supplier’s GST directly to Government?
No workaround of that kind is authorized by the CBIC FAQ. It answers “No” to whether a buyer can deposit the GST component directly into the supplier’s Government account to create the matching credit entry. A buyer should not assume that making such a payment substitutes for the supplier’s remittance.
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What records to gather if the credit is questioned
Assemble records that establish the transaction, payment and reporting trail. They can support your position, although they do not alter the Act’s actual-payment condition.
- Tax invoice or debit note, purchase order or contract, and proof that the goods or services were received; retain movement or delivery records where relevant.
- Bank or other payment records showing what you paid the supplier, including the tax amount.
- Supplier GST registration and invoice-reporting status, together with GSTR-2B and GSTR-3B reconciliations for the relevant period.
- Correspondence with the supplier about missing reporting, non-remittance or a tax demand, and records of steps taken to resolve the discrepancy.
Section 155 places the burden of proving ITC eligibility on the registered person. The Kerala High Court noted that burden in Mall of Joy Pvt Ltd v Union of India (4 June 2024).
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How courts have treated bona fide buyers
The statutory condition and a buyer’s argument that it acted in good faith are not the same question. The reported decisions below differ in approach and do not establish a single nationwide rule that every buyer can rely on to retain credit.
| Authority and date | Jurisdiction and reported position | Status or qualification |
|---|---|---|
| Mall of Joy Pvt Ltd v Union of India, 4 June 2024 | Kerala High Court discussed section 16(2)(c), the requirement that tax be paid to Government, and GSTR-1/GSTR-2B reporting. | A Kerala High Court decision; it supports the statutory risk where a supplier collected but did not remit tax. It is not a Supreme Court ruling. |
| Tripura High Court Division Bench ruling, reported by LiveLaw on 6 January 2026 | The reported approach read down section 16(2)(c) for a bona fide purchaser, limiting denial to non-bona-fide, collusive or fraudulent transactions. The report described a buyer that had paid tax, supplier-reported sales and transactions appearing in returns. | EY India reported on 29 July 2026 that the Tripura ruling was under appeal; it is not a nationwide amendment to the Act. |
| Supreme Court development, reported by EY India on 29 July 2026 | EY reported that the Court dismissed an appeal supporting the Gujarat High Court’s refusal to declare section 16(2)(c) unconstitutional or read it down. | This is EY’s summary of the development, not the primary Supreme Court judgment. It does not establish that the Court resolved every fact-specific bona fide-buyer dispute or made the Tripura ruling final nationwide. |
For an individual dispute, relevant considerations include whether there was a genuine supply, whether the buyer paid and received it, whether the supplier reported the invoice and discharged tax, what the buyer’s returns and reconciliations show, and which court’s rulings and procedural posture apply. These factors help frame a case; they do not guarantee a particular result. For a notice or contested claim, have a GST professional assess the applicable period, records and jurisdiction before deciding how to respond.
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