In the case of National Plasto Moulding Vs. State of Assam & Ors., the Gauhati High Court addressed whether purchasing dealers can be denied Input Tax Credit (ITC) if the selling dealer fails to deposit the collected tax. The court cited the Delhi High Court's ruling in On Quest Merchandising India Private Limited Vs. Government of NCT of Delhi, which determined that genuine purchasing dealers should not be punished for the selling dealer’s failure to pay the tax, considering such provisions to be unconstitutional. The Gauhati High Court concurred, ruling that tax authorities cannot deny ITC to purchasing dealers who have conducted valid transactions. Instead, tax authorities should pursue recovery actions against the defaulting selling dealer. Consequently, the court set aside the show cause notices and orders against the petitioners, emphasizing that action can only be taken against non-bona fide transactions. This decision aligns with the Delhi High Court’s stance that legitimate purchasers should not bear the consequences of the selling dealer’s tax non-compliance.