Assessee can claim ITC for the period from cancellation of GST registration to restoration

R. K. Jewelers Vs Union of India (Rajasthan High Court)

Availability of ITC during the period of GST Cancellation – Rajasthan HC Ruling

Hon’ble Rajasthan High Court (‘HC’) in the case of M/s R. K. Jewelers “the petitioner” has ruled that the petitioner firm can approach the competent authority for restoration of GST registration in terms of Notification No. 03/2023-CT dated 31^st March 2023. The Court further stated that the petitioner shall be entitled to lodge its claim for availment of ITC pertaining to the period of GST Cancellation.  Captioned ruling has been analyzed in this update.

A. FACTS OF THE CASE (relevant extracts)

• The petitioner is a proprietorship firm.
• The GST registration of the petitioner was cancelled by GST department due to non-filing of GST returns.
• Appellate authority has rejected the appeal filed by petitioner against the order passed by department.
• The petitioner has challenged the aforesaid order of Appellate Authority before Hon’ble High Court under writ jurisdiction.

B. OBSERVATION AND DECISION BY HC

• That the case of the petitioner firm is covered in the notification dated 31.03.2023 and the petitioner firm can move an application before the competent authority for restoration of its GST registration.
• That when the competent authority considers the issue of revocation of cancellation of petitioner firm GST registration under the notification dated 31.03.2023, the petitioner-firm, 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 registration is restored.

C. Our comments            

Captioned decision of Hon’ble Rajasthan High Court has cleared the air on availability of Input Tax Credit during the period of cancellation of GST registration and taxpayers would be entitled to lodge their claims post restoration of GST Registration.

FULL TEXT OF THE JUDGMENT OF RAJASTHAN HIGH COURT

This writ petition has been filed by the petitioner-firm challenging the order dated 02.02.2022 passed by the respondent No.4, whereby the GST registration of the petitioner-firm has been cancelled on the ground of non-filing of GST return by it. The appeal filed by the petitioner-firm against the said order has also been rejected by the Appellate Authority.

During the pendency of this writ petition, the competent authority under the Goods and Services Tax Act, 2017 had issued a notification dated 31.03.2023 and as per the said notification, on the conditions being fulfilled, the cancellation of registration effected on the ground of non-filing of GST return, could be revoked.

This Court is of the opinion that the case of the petitioner firm covers with the notification dated 31.03.2023 and the petitioner firm can move an application before the competent authority with a prayer for restoration of its GST registration subject to fulfillment of the conditions mentioned in the said notification.

In such circumstances, this writ petition is disposed of with liberty to the petitioner-firm to file application for restoration of its GST registration before the competent authority, which shall consider and decide the application filed by the petitioner-firm in the light of the notification dated 31.03.2023 issued by the competent authority under the Goods and Services Tax Act, 2017 expeditiously.

It is made clear that when the competent authority considers the issue of revocation of cancellation of petitioner firm GST registration under the notification dated 31.03.2023, the petitioner-firm, 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 registration is restored.

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(Author can be reached at dinesh.singhal@snr.company or cadineshsinghal@gmail.com).

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