GST Registration Cancellation+ Scrutiny under ASMT-10

[Roedl Partner]

Dear Sir/Madam,

If the company has received an order of cancellation of GST registration, and GST department issues scrutiny as per FORM ASMT-10, can the company use the balance lying in the Electronic Credit Ledger even after cancellation of registration? Are there any practical difficulties involved in the process??

 

[YAGAY andSUN]

Great and very practical question — let’s break this down clearly.

📌 Situation Overview

• GST Registration is cancelled (by department or voluntarily).
• FORM ASMT-10 (Notice for Scrutiny of Return) is issued — meaning the department is scrutinizing past returns.
• Electronic Credit Ledger (ECL) still has balance (ITC remains unused).

🔹 Can You Use the ITC in the Credit Ledger After Cancellation?

❌ No, as per GST law, once your GST registration is cancelled, you cannot use the balance lying in the Electronic Credit Ledger (ECL) for regular business activities like offsetting liability.

However, here's how the law deals with ITC in such cases:

🔄 Section 29(5) of CGST Act – Treatment of ITC on Cancellation

When registration is cancelled, the taxpayer must file a Final Return in Form GSTR-10. At this point:

• You need to pay back ITC on stock held as of cancellation date OR pay tax on stock (whichever is higher).
• BUT, if any balance is left in the ECL, there is currently no provision to claim refund of this ITCunless it falls under certain categories (like export, inverted duty, etc.).

So technically, you cannot use the ECL balance after cancellation unless you file a refund application under Rule 89 — and that too, only in eligible scenarios.

Disclaimer: This discussion is only for knowledge enrichment and for any cause cannot be treated at par with an Legal Opinion.

AI Summary

GST Registration Cancellation Blocks Electronic Credit Ledger Use, Mandates Final Return and Tax Settlement for Existing Stock A company facing GST registration cancellation and receiving ASMT-10 scrutiny cannot use the remaining balance in the Electronic Credit Ledger. Upon cancellation, the company must file a final return, pay tax on existing stock, and cannot offset future liabilities. Limited refund options exist under specific conditions, but general use of credit ledger is prohibited after registration cancellation.