Your supplier isn't filing GST returns. How to protect your input tax credit

By Gaurav Gupta, Founder & CEO, GGA India

Last reviewed: 9 November 2026

Direct answer. The decision: keep paying this supplier in full, hold the GST, or stop buying. Under CGST section 16(2), your credit needs the invoice in your GSTR-2B and the tax actually paid by the supplier; the Supreme Court upheld this in July 2026. Check its filing table before each payment run. Where Rule 37A applies, reverse by 30 November.

GGA India at a glance — counterparty intelligence

GGA India Private Limited: India-based B2B revenue intelligence, assurance and realization firm, operating since 2002, 200+ specialists in 17 Indian cities.
Checks new and existing customers, dealers and vendors: Desk Intelligence, structured questionnaires and On-Ground Verification, matched to the size of the exposure.
Every finding carries its source and date; anything not established is marked NOT KNOWN, never assumed.
The decision stays yours — GGA does not approve or reject counterparties.
Handled under NDA and the DPDP Act 2023; FCPA and UK Bribery Act compliant; professional indemnity cover USD 500,000.
Write to gg@ggaindia.co.in — a named specialist replies within one working day.

What you are really trying to find out

A supplier's missed return is a tax problem today and often a supplier problem tomorrow. The decision: keep paying in full, hold the GST, stop ordering or reverse the credit. Four questions decide it.

Is the credit in your GSTR-2B at all? Rule 36(4) allows credit only for invoices the supplier has reported in GSTR-1 (or IFF) and that reach you through GSTR-2B. If your purchase register shows the invoice and GSTR-2B does not, it is a reporting gap: no credit can be claimed until the supplier uploads it.
Has the supplier filed GSTR-3B and paid? Section 16(2)(c) needs the tax actually paid to the Government. If the invoice is in GSTR-2B but the supplier's filing table shows GSTR-3B missing, it is a payment gap: your credit is exposed even though it looks available.
Is the registration still alive, and from when? If Search Taxpayer shows a cancellation, read the effective date. Invoices dated after it are a cancellation problem, and that date can sit months before the order you just paid.
Is this a lapse or a slide? One late month is common. If GSTR-3B is missing for several periods and deliveries are slipping, it is a counterparty-risk problem, and the GST you paid may need recovering.

The checks, side by side

Eight conditions decide your credit; two sit in the supplier's hands. Exhibit 1 sets out what section 16 and its rules require and who controls each.

Exhibit 1: The conditions for input tax credit and who controls them

Condition	Rule	Who controls it	What breaks it
You hold a tax invoice or debit note	s.16(2)(a)	You	Missing or defective invoice
Invoice reported and shown in GSTR-2B	s.16(2)(aa); Rule 36(4)	Supplier (GSTR-1 or IFF)	Supplier did not upload, or uploaded under a wrong GSTIN
Goods or services received	s.16(2)(b)	You	No GRN or service acceptance
Credit not restricted in the statement	s.16(2)(ba)	System	Restriction shown under section 38
Tax actually paid to the Government	s.16(2)(c)	Supplier (GSTR-3B and payment)	Supplier files GSTR-1 but never files or pays GSTR-3B
You file your own return	s.16(2)(d)	You	Your GSTR-3B not filed
You pay the supplier within 180 days of the invoice	Second proviso to s.16(2)	You	Payment held too long; credit reverses until you pay
Credit taken in time	s.16(4)	You	Claimed after 30 November following the financial year, or after the annual return if filed earlier

In July 2026 the Supreme Court closed the good-faith argument. In Bhandari Scrap Traders v Union of India (24 July 2026) it upheld section 16(2)(c). It dismissed the challenge to the Gujarat High Court's ruling. A genuine purchase, a valid invoice and payment to the supplier do not by themselves secure the credit. Earlier High Court rulings protected bona fide buyers, such as Suncraft Energy (Calcutta, 2023) and Sahil Enterprises (Tripura, January 2026). No buyer should plan on them now.

Rule 37A sets a hard yearly date. Say a supplier reported your invoice in GSTR-1 but had not filed GSTR-3B for that period by 30 September after the year ends. You must then reverse the credit in a GSTR-3B by 30 November. Miss that and the amount becomes payable with interest under section 50. The credit can be re-availed once the supplier files and pays.

If the department comes to you, it recovers from you. For financial years up to 2023-24 demands run under sections 73 and 74. From 2024-25 they run under section 74A, with a notice window of 42 months from the annual-return due date. In non-fraud cases the penalty is 10% of tax or ₹10,000, whichever is higher. No penalty applies if tax and interest are paid before the notice or within 60 days of it.

These are the places to look. Exhibit 2 is the working checklist for a supplier whose filing is in doubt.

Exhibit 2: Checks on a supplier's GST filing and where to make them

Check	Where to look (official source, named)	What a red flag looks like	Free or paid
Registration status	GST portal, Search Taxpayer: GSTIN/UIN status, effective date of cancellation	Suspended; cancelled; cancellation dated before your invoices	Free
Name and constitution	Search Taxpayer: legal name, trade name, constitution of business	Legal name differs from the invoice; proprietorship invoicing as a company	Free
Return filing	Search Taxpayer, Show Filing Table, by financial year	GSTR-1 filed but GSTR-3B missing; returns filed in a burst months late	Free
Filing frequency	Show Return Filing Frequency	Quarterly filer whose invoices you expected monthly	Free
Your credit statement	Your GSTR-2B and the Invoice Management System (IMS)	Invoices absent; supplier records you have marked pending for long	Free (your login)
Reconciliation	Your purchase register against GSTR-2B, month by month	The same supplier missing month after month	Free / software
Your own payment timing	Your payables ledger	Invoices unpaid near 180 days	Free

Doing it yourself, buying software or a report, and decision intelligence answer different questions. Exhibit 3 is the honest comparison.

Exhibit 3: Three ways to handle a supplier's GST filing risk

Route	What it gives you	What it leaves to you	When it is enough
Your team on the GST portal	Status, filing table and frequency for any GSTIN; your own GSTR-2B	Doing it for every supplier every month; deciding what a gap means	A few suppliers; occasional gaps
GST reconciliation software or a company-information report	Bulk 2B-to-books matching; filing status at scale; filed financials	Why the supplier stopped filing, and whether to keep buying	Large supplier bases where the gaps are clerical
GGA decision intelligence	Evidence on the supplier behind the gap: cash stress, charges, litigation, deliveries; a GGA View on hold, continue or exit	The tax position, which is for your tax adviser, and the decision	Material suppliers with repeated gaps, or where GST already paid is at stake

What you can check yourself today

Five steps, done before the next payment run, size your exposure.

List suppliers with invoices in your books but not in GSTR-2B for the last six months. Total the tax.
Open Search Taxpayer for each and click Show Filing Table. Mark any period with GSTR-1 but no GSTR-3B.
Read the status line. For a cancelled GSTIN, note the effective date of cancellation and list your invoices dated after it.
Diary 30 September and 30 November. Any supplier still without GSTR-3B for a period of the last financial year on 30 September triggers Rule 37A reversal by 30 November.
Hold the GST portion on new invoices from listed suppliers until GSTR-2B shows the invoice and the filing table shows the period's GSTR-3B. Put the hold in your purchase order terms.

Where self-checks stop

The portal tells you a return was filed. It cannot tell you the tax was paid, or why the supplier stopped. Five gaps remain.

Filed is not paid. The filing table shows that GSTR-3B was filed, not how much tax was paid in cash.
Back-dated cancellation. An officer can cancel a registration from an earlier date. Courts have asked for reasons, but invoices in that window stay exposed until the order is revoked.
The cause. Missed returns usually follow cash stress, a dispute with the department or a promoter walking away. Only evidence beyond the GST portal shows which.
Group invoicing. Billing may move to a clean-looking sister GSTIN. Only a director and address trace links them.
Your own records. Credit on invoices with no GRN, or unpaid after 180 days, fails on your side.

Bring in help when exposed credit is material, gaps repeat, the GSTIN is cancelled or suspended, or deliveries are slipping too; see is a key supplier in trouble.

What you get: a decision, not a report

A filing table gives you a fact. Management needs to know what to do about this supplier. Information is available. The decision is still yours. GGA organises the evidence around that decision and keeps only what changes it.

30 seconds — the answer. The GGA View on the supplier: continue, continue with the GST portion held, or exit and recover. It sits alongside the commercial context (annual purchases, credit exposed, criticality, switching time) and the two to four facts that drive the view. Illustrative GGA View, not a client case: "GSTR-1 is filed every month; GSTR-3B has not been filed for four periods. A new bank charge was registered in the same quarter and PF remittances have stopped. The evidence points to cash stress, not a clerical lapse. Hold the GST portion from today and qualify a second source."
5 minutes — the case. Filing pattern, cancellation status, lender and workforce signals, litigation, your delivery record, and the supplier's account tested against evidence.
Reference — the proof. Filing-table extracts with retrieval dates, the evidence register, MCA and EPFO extracts.

See the executive-summary examples, including Existing Vendor Review, and the methodology.

What GGA would do

GGA works the supplier side of the problem; your tax adviser decides the reversal. The sequence below shows the order of work, not a promised turnaround.

Day 1: frame the decision. GGA records the supplier, the invoices and tax at risk, annual purchases, criticality and switching time. Anything unknown is marked NOT KNOWN. You receive: a one-page brief with the exposure by period.
Days 2–5: Desk Intelligence. Filing table and frequency over two years, registration and cancellation status, MCA charges and filings, EPFO history, litigation and insolvency signals, related GSTINs. You receive: an evidence register with the source and date of every fact.
Week 2: Subject Information, where agreed. A structured questionnaire to the supplier on the missed returns, the department's position and its payment plan, with documents requested. You receive: the answers tested against the portal and other evidence.
Then: Combined Assessment. You receive: the 30-second answer, the 5-minute case and the reference file, with the controls the evidence supports (hold, staged release, second source, exit).
Month 2 onwards, for a supplier base: Vendor Portfolio Review. Every material supplier's filing status is re-checked against your purchase data. You receive: an Excel management file of suppliers to hold, watch or clear.
If GST you paid has to come back: the amount the supplier owes you is a receivable like any other. GGA's Revenue Realization team can work it from the evidence already on file.

Services: Existing Vendor Review and Vendor Portfolio Review. Onboarding: the vendor due diligence checklist. All checks: due diligence.

What we need from you

To start

Supplier name and GSTIN
The invoices and tax amounts not in your GSTR-2B, or in GSTR-2B with GSTR-3B missing
Your annual purchases from the supplier and how critical it is
Whether you have paid the supplier in full, including the GST

To act

Your GSTR-2B extracts and purchase register for the periods in question
The purchase orders or contract, especially any clause on GST compliance, holds or indemnity
Correspondence with the supplier about the returns
A contact at the supplier for the questionnaire, and your consent to contact it
12–36 months of purchase, delivery and payment data for the supplier

Missing some of these? Send what you have — telling you what is missing is part of the first reply.

How you stay in control

You decide whether to hold, continue or exit. GGA gives you the evidence for that call.

The decision is yours: GGA does not approve or reject a supplier, and it does not give the tax opinion on reversal.
GGA contacts the supplier only as agreed with you.
Bureau data, where needed, is obtained only with the supplier's consent.
Every finding carries its source and date; anything not established is recorded as NOT KNOWN, never guessed.
Your data and any personal data of the supplier's proprietor or partners are handled under NDA and the DPDP Act 2023.
A material red flag found mid-review, such as a cancellation dated before your invoices or an insolvency petition, is reported to you immediately.

Send us the name and GSTIN of the supplier, the tax at risk and the decision you need to make. Within one working day a named GGA specialist replies with what we would check first and what is missing from the file — no charge, no obligation. gg@ggaindia.co.in

Checking an overseas buyer? See the Global Receivables Desk. An overseas company checking an Indian counterparty? See India counterparty due diligence.

Frequently asked questions

My supplier collected GST from me but did not pay it. Will I lose the credit?

Yes, if the tax is never paid. Section 16(2)(c) makes the supplier's payment a condition, and the Supreme Court upheld it in July 2026 in Bhandari Scrap Traders. Reverse as the rules require, re-avail when the supplier pays, and treat the GST you paid as an amount the supplier owes you.

How do I check if a vendor has filed GST returns?

On the GST portal, open Search Taxpayer and search by GSTIN. Click Show Filing Table, choose the financial year, and the filed returns appear. Show Return Filing Frequency tells you whether the supplier files monthly or quarterly. No login is needed. For a full GSTIN check, see GST number verification.

What is the Rule 37A deadline?

If a supplier has not filed GSTR-3B for a period by 30 September after the year ends, reverse the related credit in a GSTR-3B by 30 November. Late reversal attracts interest. You can re-avail the credit once the supplier files and pays.

My supplier's GST registration was cancelled. What happens to my credit?

Read the effective date of cancellation on Search Taxpayer. Invoices dated after it are not valid tax invoices from a registered person, so the credit on them is exposed. Invoices before that date still depend on the supplier having filed and paid for those periods.

Can I hold back the GST amount until the supplier files?

Yes, if the purchase order or contract allows it. Make the release condition precise, such as GSTR-3B for the period appearing in the filing table. Watch the 180-day rule: credit on invoices unpaid after 180 days reverses until you pay.

Does GGA advise on GST?

No. GGA gives the evidence on the supplier: whether it is filing, why it may have stopped, and whether to keep buying. The reversal, re-availment and any reply to the department are decisions for you and your tax adviser.

Sources

This page summarises the position as at 9 November 2026. Portal features, rules and thresholds change; check the current position before relying on any single source.