Can GST input tax credit be denied if my supplier hasn't paid their GST?

This is a genuinely significant and contested issue in GST practice — tax authorities have in various cases sought to deny or reverse a buyer's input tax credit where the supplier failed to deposit the corresponding tax, even though the buyer paid the GST amount to the supplier in good faith as part of the transaction.

Courts and tribunals have taken varying approaches to this issue, and there have been positive developments recognising that a genuine, bona fide buyer who has taken reasonable care (verifying the supplier's registration, retaining proper invoices and payment proof) shouldn't automatically be penalised for a supplier's independent default.

To protect your position, keep thorough documentation of the transaction, payment (including the GST component, ideally paid separately and traceably), and evidence you exercised reasonable diligence regarding your supplier. Given how technical and fact-specific this area is, and its currently evolving legal treatment, it would be worth engaging a GST specialist or tax lawyer to respond to the specific notice or dispute you're facing.