Goods & Services Tax (GST) in IndiaRevocation Of Cancelled GST Registration Permissible On Fulfilment Of Conditions

The Hon’ble Gujarat High Court, in the case of Allyssum Infra V. Union Of India [R/Special Civil Application No. 23556 of 2022], held that the effect of Input Tax Credit (hereinafter referred to as “ITC”) would apply if GST registration were revoked due to non-filing of returns, but could potentially be reversed after fulfilling the conditions as prescribed.

FACTS OF THE CASE

Allyssum Infra (hereinafter referred to as the “Petitioner”), is the partnership firm engaged in the business of real estate whose GST registration  was  cancelled on the ground that Petitioner did not filed the GST returns.

The order for the cancellation of GST registration of the Petitioner was passed on 11/01/2022 (hereinafter referred to as “impugned order”), however, the impugned order was given retrospective effect from 10/09/2021.

Thus, being aggrieved by the same, the Petitioner has challenged the impugned order of cancellation of registration and filed the present petition. .

ISSUES BEFORE THE COURT

1. Whether the cancelled GST registration of the Petitioner be revoked ?

2. Whether the claim of ITC is deprived due to retrospective cancellation of GST registration?

CONTENTION OF THE PARTIES

Petitioner contended  that retrospective cancellation from 10/09/2021 of GST registration has deprived his right to claim ITC for the period from date of cancellation to the date of restoration of GST registration.

Petitioner further submitted that he is eligible to make application to the competent authority through the NOTIFICATION NO. 03/2023 dated 31.03.2023 according to which on conditions being fulfilled, the cancellation of registration effected on the ground of non-filling of the GST returns, could be revoked.

Thus, the Petitioner averred that case falls under the ambit of the said notification and said notification stand to the benefit of Petitioner.

FINDINGS OF THE COURT

The Hon’ble Gujarat High Court has allowed the petition filed by the Petitioner  and held that as the Petitioner’s case falls within the scope of aforementioned notification, the Hon’ble Court has permitted the Petitioner to apply to the competent authority for the benefits outlined in the notification.

Regarding the issue of claiming ITC for the period from the date of cancellation to the date of restoration of registration, the Hon’ble High Court has observed that the Petitioner shall be entitled to lodge its claim for ITC once the competent authority considers the issue of revocation of cancellation and the registration is restored.

Thus, the Hon’ble High Court  disposed the present petition.

AMLEGALS REMARK

In conclusion, it is affirmed that upon the revocation of GST registration, the taxpayer is entitled to seek ITC for the duration between the cancellation and restoration dates. The judgment appropriately supports the taxpayer’s entitlement to claim ITC under section 16 of Central Goods and Services Act, 2017.

However, it lacks clarity regarding the deadline for claiming ITC post-restoration, potentially causing confusion among taxpayers. Notification provides an extension of the deadline for certain taxpayers to apply for revocation of their cancelled GST registration.

– Team AMLEGALS assisted by Mr. Shaurya Pandey