Tripura High Court · GST · AKHB case note
M/s Sahil Enterprises v. Union of India and Others
WP(C) No. 688 of 2022
(2026) 154 GSTR 108 (Tri.) ·
Final High Court merits decision, partly allowing the writ; operation stayed by Supreme Court on 1 September 2026.
Purchaser at High Court: substantive ITC relief, with the provision upheld and read down. That judgment is subject to the verified Supreme Court stay.
01 · Facts of the case and issues
Sahil, a proprietary rubber-products trader, bought goods from M/s Sentu Dey between July 2017 and January 2019 and paid it GST of Rs. 1,11,60,830. The supplier reported sales in GSTR-1 but filed nil GSTR-3B returns without remitting the collected tax. Revenue denied the purchaser’s ITC and confirmed a demand with interest and penalty under Section 73.
Sahil challenged the adjudication dated 17 May 2022 and Section 16(2)(c), arguing that it could check GSTR-2A but could neither verify the supplier’s GSTR-3B nor compel remittance. The issue was whether the payment-to-Government condition could constitutionally deny credit on these bona fide purchases.
Source: Original physical pp. 1–4, paragraphs 1–10; p. 8, paragraphs 16–18.
02 · Discussion and reasoning of the Hon’ble Court
The Court accepted the undisputed practical inability to police the supplier’s remittance. It considered equal treatment of bona fide purchasers and dishonest participants disproportionate under Article 14, and adopted reading down to preserve the provision’s validity. It also relied on ITC’s anti-double-taxation purpose, while acknowledging that express legislation can permit double taxation.
It extended the Delhi VAT reasoning in On Quest Merchandising and Shanti Kiran to CGST, considered Arise India and the Supreme Court’s 9 October 2025 Shanti Kiran order, and followed the Gauhati approach. It expressly declined stricter views including Patna’s Aastha Enterprises. These are distinct cases and statutory settings; the VAT orders do not themselves decide CGST Section 16(2)(c).
For Sahil specifically, tax payment to the supplier was undisputed. Revenue had invoked non-fraud Section 73, not Section 74, and attributed the retention of tax to the supplier. The Court therefore found the transaction bona fide and non-collusive. The protection excluded non-bona-fide, collusive or fraudulent transactions; it did not dispense with every other ITC condition.
Source: Original pp. 8–21, paragraphs 16–48, particularly 23–24, 34–35 and 39–47; pp. 22–23, paragraphs 53–56. Supreme Court Shanti Kiran order, paragraphs 2–7, pp. 1–5.
03 · Judicial decision and operative relief
The writ was partly allowed. Section 16(2)(c) was held not to violate Articles 14, 19(1)(g), 265 or 300A, but was read down to protect bona fide purchases like Sahil’s. The challenged order was set aside and Revenue directed forthwith to allow Rs. 1,11,60,830 of ITC. No costs were awarded; pending applications were disposed of. This was credit relief, not a cash refund or remand.
Paragraph 57(c) prints the order date as 7 May 2022; paragraphs 1, 8, 9 and 53 identify it as 17 May 2022. The discrepancy is retained. The subsequent Supreme Court stay suspends the High Court judgment’s operation.
Source: Original p. 23, paragraph 57(a)–(e); date comparison with pp. 1, 3–4 and 22. Supreme Court order dated 1 September 2026, paragraph 4, physical p. 2.
04 · In favour of
Mixed constitutional outcome but substantive purchaser relief at High Court. The later stay is interim; it is neither an affirmance nor a final reversal on Sahil’s merits.
Source: Original paragraph 57; Supreme Court orders dated 1 September 2026, paragraph 4, and 17 September 2026, p. 2.
05 · AKHB REVIEW POINT
AKHB analysis: Do not present Sahil as operative nationwide protection or as striking down Section 16(2)(c). Preserve invoices, receipt and payment evidence, supplier-registration and return records, and the actual fraud allegations in the notice. Section 73 alone is not a universal certificate of bona fides.
Distinguish supplier non-payment from a mere return mismatch, and assess the statutory version applicable to the tax period. Address the Supreme Court stay and Bhandari’s contrary reasoning in any reliance analysis. Preserve limitation and appeal rights rather than treating the pending Supreme Court proceedings as automatic protection from a separate demand.
Source: AKHB commentary based on original paragraphs 16, 19, 35 and 53–57; Supreme Court Bhandari order pp. 2–3 and Sahil stay order paragraph 4. Practical steps are analysis, not additional judicial directions.
Source and verification
Complete 23-page official Tripura High Court judgment. The later Supreme Court stay and listing orders are separately identified below. · Individual hosted copy of the original judgment
All 23 physical original pages, including paragraphs 1–57, quoted statutes and authorities, footnotes and every operative clause, read in full and individually visually checked. Selected additional official sources were separately reviewed as identified below.
Source checked 2026-10-12. Paragraph references follow the identified official judgment; PDF-page references follow that source file. The court’s printed paragraph numbers may differ from commercial reporting.
Prepared with AI assistance from the complete official High Court judgment and the identified additional official sources. No human legal review is claimed.
For professional information only; not legal advice. Read the full judgments and applicable law, verify later treatment and obtain case-specific professional advice before acting.
No neutral citation is printed in the retained High Court original. The reporter citation is verified from footnote 1 on p. 2 of the Supreme Court’s Bhandari order. The original’s challenged-order date discrepancy is disclosed above. Paragraph 38 records statements made at the Bar about Gauhati appeals; those statements are not independently certified appellate outcomes here. Shanti Kiran’s Supreme Court lead docket is Civil Appeal Nos. 2042–2047/2015, with connected Civil Appeal 9902/2017, rather than the connected number alone cited in Sahil’s footnote 6. On 12 October 2026 the eCourts link returned an unavailable-order notice; the preserved 23-page corpus original, rather than a successful fresh download, is the source reviewed here.
Statutory scope
The transactions predate the later wording reproduced in paragraphs 11 and 13. Section 16(2)(aa) commenced on 1 January 2022; clause (ba) and substituted Section 41 commenced on 1 October 2022. Rule 36(4) first applied from 9 October 2019. Do not retrospectively impose the quoted GSTR-2B regime on July 2017–January 2019 supplies. Current Section 41 provides reversal for supplier non-payment and re-availment after payment, subject to prescribed requirements; period-specific application requires separate examination.
Later treatment and present applicability
Checked 12 October 2026: the Supreme Court’s 1 September 2026 order in Diary 33460/2026 with 34139/2026 stayed the challenged High Court judgments. Its 17 September order, SLP(C) 31573/2026 with 31578/2026, directed listing on 14 October 2026 without deciding merits or vacating the stay. Separately, Bhandari Scrap Traders (24 July 2026) expressly discussed Sahil, rejected parity between Delhi VAT and CGST, and gave reasons dismissing the Gujarat-based constitutional/read-down challenges. No grant of leave is recorded in Bhandari; it is not a final disposition of Sahil. These are bounded verified-order checks, not exhaustive citator or live-docket certification.
Additional identified sources
- Supreme Court: Sahil Enterprises stay order, 1 September 2026 · Diary 33460/2026 with 34139/2026; paragraph 4, physical p. 2; repeated on p. 4. All four pages reviewed; first two pages are revised for appearance only.
- Supreme Court: Sahil Enterprises listing order, 17 September 2026 · SLP(C) 31573/2026 with 31578/2026; operative direction on p. 2. All two pages reviewed.
- Supreme Court: Bhandari Scrap Traders, 24 July 2026 · SLP(C) 23931/2026 with 24088/2026 and 24103/2026; pp. 2–3, unnumbered reasoning and dismissal; footnote 1 for Sahil reporter citation. All three pages reviewed.
- Supreme Court: Shanti Kiran India, 9 October 2025 · Civil Appeal Nos. 2042–2047/2015 with 9902/2017; paragraphs 2–7, pp. 1–5, especially paragraph 7. All seven pages reviewed.
- Supreme Court: Arise India, 10 January 2018 · SLP(C) 36750/2017; pp. 1–2, dismissal and liberty regarding non-bona-fide transactions. Both pages reviewed.
- India Code: CGST Act as on 11 June 2026 · Section 16 and amendment footnotes, physical p. 30; substituted Section 41 and commencement footnote, physical p. 50. Targeted statutory check.
- CBIC Circular 183/15/2022-GST, 27 December 2022 · Paragraph 2, physical pp. 1–2: Rule 36(4) restrictions commenced on 9 October 2019. Used for temporal context, not as relief applicable to admitted supplier non-payment.
AI disclosure & professional disclaimer
AI-assisted research checked against the identified primary source. Extraction, interpretation or omission errors remain possible. Source review does not mean independent approval by a practising professional. Verify every material statement against the complete original judgment.
General research information only; not legal or tax advice, a certified judgment or a substitute for the full order. Applicability depends on the facts, tax period, statutory version and jurisdiction. Subsequent treatment is unverified unless the note expressly identifies the sources checked. Downloading does not create a professional engagement. Obtain case-specific advice before reliance.