ITC availability in case of cancellation of GST

[RAGHAV SHARMA]

Hello Everyone,

The GST return for the financial year 2022–2023 was not filed, leading to cancellation of GST registration in February 2023, with effect from March 2022. No revocation application has been submitted to date. Subsequently, a DRC-01 notice has been issued, demanding tax liability for FY 2022–2023 based on GSTR-7 data.

However, the state GST officer is not considering the Input Tax Credit (ITC) reflected in GSTR-2B.

Query:

Can the ITC available in GSTR-2B for that period be adjusted against the tax liability demanded in DRC-01, even though the registration is cancelled and revocation has not been filed?

Thanks

AI Summary

GST Registration Cancellation Challenges Taxpayer's Input Tax Credit Claims Under Section 16 of CGST Act A taxpayer's GST registration was cancelled retrospectively for non-filing of returns in 2022-2023. The tax authority issued a DRC-01 notice demanding tax liability and refused to consider Input Tax Credit (ITC) reflected in GSTR-2B. Legal experts suggest that while ITC cannot be automatically claimed during cancelled registration, restoration of GSTIN may allow credit adjustment upon providing supporting transaction documents and meeting specific statutory conditions under Section 16 of the CGST Act.