Case Law Details
Hithaishi Infra Machine Vs Assistant Commissioner ST FAC (Andhra Pradesh High Court)
The Andhra Pradesh High Court considered a writ petition challenging the reversal of closing Input Tax Credit (ITC) following cancellation of GST registration. The petitioner, a registered dealer under the GST Act, was issued a show cause notice on 24.08.2024 proposing cancellation of registration on the ground that business was not being conducted at the principal place of business. As no reply was submitted, the registration was cancelled by order dated 10.09.2024 with retrospective effect from 16.07.2020. Thereafter, a show cause notice dated 13.02.2025 was issued directing reversal of closing ITC of ₹22,68,580/- under Section 29(5) of the Act, which was confirmed by an assessment order dated 01.03.2025.
The petitioner challenged the ITC reversal, contending that no reply was filed earlier due to the departure of the firm’s accountant and lack of access to notices uploaded on the GST portal after cancellation. During the hearing, it was pointed out that the petitioner had separately challenged the cancellation of GST registration in an earlier writ petition, which was allowed by the High Court on 24.09.2025, resulting in restoration of the registration.
The Court examined the impugned ITC reversal order and noted that it was based solely on the premise that the GST registration stood cancelled and that the petitioner had neither filed Form GSTR-10 nor obtained a new registration for transfer of credit. However, in view of the subsequent restoration of the GST registration by the High Court, the basis for invoking Section 29(5) no longer survived. The Court held that once the registration itself was restored, the question of reversing the closing balance of ITC did not arise.
Accordingly, the High Court set aside the assessment order directing reversal of ITC and allowed the writ petition. It clarified that the order would not preclude the tax authorities from initiating appropriate action against the petitioner in accordance with law. No order as to costs was made, and all pending applications were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
1. The petitioner is a register dealer under the GST Act. The 2nd respondent issued show cause notice dated 24.08.2024 asking the petitioner to submit explanation as to why the GST registration of the petitioner shall not be cancelled on the ground that the petitioner is not conducting business at its principal place of business as per the registration certificate.
2. It is stated that the petitioner could not replied to the said show cause notice and thereafter the 2nd respondent by order dated 10.09.2024 cancelled the GST registration of the petitioner with effect from 16.07.2020. Thereafter, the petitioner was issued a show cause notice dt.13.02.2025, directing him to reverse the closing balance of input tax credit lying in its Electronic Credit Ledger amounting to Rs.22,68,580/- as per Section 29(5) of the Act. Later, the 1st respondent passed assessment order dated 01.03.2025 confirming the demand for reversal of closing balance ITC as the registration of the petitioner itself was cancelled. Questioning the said order, the present writ petition is filed.
3. The counsel for the petitioner would contend that he would not give reply to the show cause notice inasmuch as its Accountant has left the petitioner’s firm during April, 2024. He would further submit that in view of cancellation of the registration of the petitioner, it had no information with regard to the issuance of show cause notice being uploaded in the GSTN portal. Apart from the same the order under challenge was assailed on various other grounds including lack of DIN and signature.
4. During the course of hearing, the counsel for the petitioner would submit that questioning the cancellation of registration of the petitioner, a writ petition vide WP No.26305 of 2025 was filed before this Court and the same was allowed by order dated 24.09.2025, consequently the registration of the petitioner’s firm was restored. He would further submit that in view of the restoration of the petitioner’s registration the question of reversal of closing balance of ITC does not arise and requested to set aside the order under challenge.
5. On perusal of the impugned order, it is evident that the same was passed on the ground that the petitioner has not filed Form-GSTR-10 or it obtained new GST registration to get transfer of such closing credit. As the petitioner has availed the said benefit of ITC amounting to Rs.22,68,580/-, it had to reverse the same in view of cancellation of registration. Since, the registration of the petitioner was restored in view of order dated 24.09.2025 in WP No.26305 of 2025 passed by this Court, the question of reversal of closing balance of ITC does not arise in the case on hand. In view of the same, the impugned order is set aside and the writ petition is allowed.
6. Needless to mention, this order will not preclude the respondents to initiate appropriate action against the petitioner in accordance with law.
7. Accordingly, the writ petition is allowed. There shall be no order as to costs.
As a sequel, pending applications, if any shall stand closed.
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