Supreme Court Stays Tripura HC's Read-Down of Section 16(2)(c), Lists Sahil Enterprises for Final Disposal on 17 September 2026

The Supreme Court has stayed the Tripura High Court's landmark judgment in Sahil Enterprises which had read down Section 16(2)(c) of the CGST Act to protect bona fide purchasers from ITC denial on account of supplier default. The bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran, in SLP (Civil) Diary No. 33460/2026 (Union of India v. M/s Sahil Enterprises, decided 01.09.2026), condoned the delay, issued notice, and — critically — listed the matter for final disposal on 17.09.2026, indicating the Supreme Court's intent to settle the issue swiftly.

This stay, coming barely five weeks after the Supreme Court's decision in Bhandari Scrap Traders v. Union of India (24.07.2026) — which upheld the Gujarat HC's refusal to read down Section 16(2)(c), distinguished the Tripura HC's approach, and expressly negated the read-down plea — effectively forecloses the line of authority that taxpayers across the country had been relying upon. The Sahil Enterprises judgment had been the foundation for a series of favourable rulings in Tripura, Karnataka (Instakart Services) and Gauhati (National Plasto Moulding), all of which read down Section 16(2)(c) to preserve ITC in the hands of bona fide recipients where the supplier had failed to remit the tax collected. With the Tripura HC judgment now stayed and the Gujarat HC position affirmed, practitioners advising recipients facing ITC reversal on account of supplier default will need to recalibrate their strategy — focusing on the Section 41 re-availment mechanism, pursuit of the defaulting supplier, and building the factual record on bona fides in the appellate proceedings, rather than relying on constitutional challenges.

The Rajasthan High Court, in Sumetco Alloys Private Limited (D.B. Civil Writ Petition No. 9323/2026, decided 13.08.2026), has already applied Bhandari Scrap Traders and held that the Sahil Enterprises read-down is no longer available.

— 2026-juristway.com-2460-SC-GST  |  Supreme Court of India  |  SLP (Civil) Diary No. 33460/2026 with SLP (Civil) Diary No. 34139/2026  |  01.09.2026