IMPACT OF ITC WHERE THE GST REGISTRATION HAS BEEN CANCELLED ON THE GROUND OF NON-FILING OF RETURNS AND THE SAME CAN REVOKE UNDER THE GST AMNESTY SCHEME 2023

[Kapil Mahani]

Revocation of Cancellation of GST Registration -  Impact of ITC

Relied Upon the Judgment of Hon’ble Gujrat High Court at Ahmedabad Bench In The Matter Of:

ALLYSSUM Infra Vs. Union of India [2023 (4) TMI 1123 - GUJARAT HIGH COURT]

ISSUE: GST registration has been canceled due to non-filing of return can revoke the registration under the Amnesty Scheme and the same can claim the unutilized Input Tax Credit during the period of cancellation of registration till the revocation of cancellation of GST Registration.

Facts of the Case:

1. Assessee, a partnership firm engaged in the business of real estate projects whose GST registration has been cancelled by the department on the ground that the assessee did not file the return on the order dated 11.01.2022 with effect from 10.09.2021.
2. Assessee has challenged the order of cancellation of GST registration and filed this present writ petition before the Gujrat High Court.
3. The assessee chooses to opt for the GST Amnesty Scheme 2023 under notification no. 3/2023 dated 31.03.2023 on the revocation of cancellation of GST registration for non-filing of return.
4. The assessee has submitted that the cancellation of GST registration on the ground of non-filing of the return falls under the said notification.
5. Thereafter, competent authority permits the assessee to file an application for revocation under Amnesty Scheme. The authority deal with the same and gives the benefit of said notification to the assessee whenever the application has been filed before the due date.
6. Assessee also submitted that the retrospective cancellation of the GST registration of the assessee may come in its way of claiming ITC for the period from the date of cancellation till the date of restoration of GST registration.

Court Ruling: -

Hon’ble High Court observed that when the competent authority considers the issue of revocation of cancellation of the GST registration of the assessee under the aforesaid notification, the assessee shall be entitled to lodge its claim for availment of Input Tax Credit in respect of the period from the cancellation of the registration till the restoration of the registration.

Conclusion:

In this regard, we would like to conclude that after the revocation of cancellation of GST registration, the assessee can claim for availment of the ITC in respect of the period from the cancellation of the registration till the date of restoration. This Judgment is rightly in favor of the assessee and fairly justified that the assessee can claim the avail of ITC.

The last date for availing ITC after the restoration is missing under this Judgement as the time period of availment of ITC is not clear in the said judgment which may create confusion in the mind of the Assessee.

Relied upon various Judgment has been passed continuously by the several Hon’ble High Court.

F&Q

Q1. Whether time relaxation for claiming ITC for a defaulter and not extending the time limit for non- defaulter create a non-justice for those who timely file the return and claim the ITC within the prescribed time?

Ans. It is rightly concluded by the Hon’ble Court that the assessee whose registration is canceled due to non-filing of return and revoking the cancellation of GST registration under the Amnesty Scheme can claim the ITC from the such period of cancellation till the date of restoration of registration.

Q2. Whether the time limit is extended for those taxpayers whose registration is being canceled and now restored?

Ans. Due to the cancellation of GST registration, the assessee is not able to access the GST portal from the date of cancellation of registration to the date of restoration. Hence, Hon’ble Court rightly decided in favor of the assessee to claim his right of availing the ITC.

For Example –

GST registration has been canceled of Company “X” by the department vide order dated 31^st December 2020 for non-filing of returns from the preceding 6 months. Company “X” can file an Amnesty application for revocation of cancellation of GST Registration on the GST Portal under the GST Amnesty Scheme dated 1^st May 2023. When Company “X” paid all the taxes, interest, penalties or late fees shown in the portal in respect of returns. The GST registration can be effective and the same Company “X” can claim the benefit of ITC in respect of respective returns.