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

Input Tax Credit availability depends on valid GST registration; revocation and compliance are required before GSTR-2B credits offset demands.
Retrospective cancellation of GST registration renders the taxpayer unregistered for the affected period, making ITC reflected in GSTR-2B provisional and not automatically adjustable against tax demands; entitlement to claim or utilize such ITC requires successful revocation of cancellation and satisfaction of statutory claim conditions, timely return filings and documentary proof of inward supplies, otherwise the authority may disallow adjustment and require reversal with interest and penalties.