ITC can be reclaimed when a GST registration is revoked

In M/s R.K. Jewellers v. Union of India [D.B. CWP No. 4236 of 2023 dated April 26, 2023], the Honourable Rajasthan High Court held that the cancellation of registration effected on the basis of non-filing of GST return, could be revoked and the assessee can claim Input Tax Credit (“ITC”). This will happen when the department considers the issue of revocation of such cancelled GST registration. Additionally, it was decided that the assessee had the right to file a claim for the ITC for the time from the GST registration’s cancellation to its restoration.

Fact and issue of the case

M/s R.K Jewellers (“the Petitioner”) has filed this petition to overturn the order dated February 2, 2022 (“the Impugned Order”) made by the Appellate Authority, Commercial Tax, Jodhpur (“the Respondent”), in which the Petitioner’s GST registration was revoked due to the non-filing of a GST return. Additionally, the petitioner appealed the contested order, but that was also denied by the appellate authority.

This petition has been filed out of aggravation.

Can ITC be claimed during the cancellation of a GST registration?

Observation of the court

The Hon’ble Rajasthan High Court in D.B. CWP No. 4236 of 2023 has held as under: Observed that, a notification dated March 31, 2023 had been issued 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. Opined that, the Petitioner is covered under the notification dated March 31, 2023 and the Petitioner can move an application before the competent authority with a prayer for restoration of its GST registration subject to fulfilment of the specified conditions.

The following ruling was made by the Honourable Rajasthan High Court in D.B. CWP No. 4236 of 2023:

Observed that a notice dated March 31, 2023 had been issued, and that, under the terms of the said notification, the cancellation of registration effected on the basis of non-filing of GST return, might be reversed upon the fulfilment of the criteria.

The petitioner, according to the opinion, is covered by the notification from March 31, 2023, and can submit an application to the appropriate authority with a request for the restoration of its GST registration, provided that the prerequisites are met.

directed the Petitioner to submit an application to the relevant authority for the restoration of its GST registration. The competent authority will review the application and make a decision in light of the notification of March 31, 2023.

Furthermore, it was made clear that the petitioner would be able to submit a claim for the use of an ITC for the time between the registration’s cancellation and restoration when the competent authority was debating the issue of the cancellation of the petitioner’s GST registration.

Relevant provision:

Section 30 of the Central Goods and Services Tax Act of 2017 (“the CGST Act”) states:

“Revocation or cancellation of registration.

(1) Any registered person whose registration is revoked by the proper officer at their own initiative may apply to that officer for the revocation of the registration in the manner, within the timeframe, and subject to the conditions and restrictions that may be prescribed.

(a) for a time period not to exceed thirty days, by the Additional Commissioner or Joint Commissioner, as applicable;
(b) for a time period not to exceed thirty days, by the Commissioner, following the time period mentioned in subsection (a).

(2) The proper official may, by order, revoke the cancellation of the registration or reject the application in the manner and within the timeframe specified:

As long as the applicant has been given a chance to be heard, the application for revocation or cancellation of registration cannot be rejected.

(3) Revocation of cancellation of registration under this Act shall be deemed to be a revocation of cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as applicable.