Bombay HC orders Restoration of Cancelled GST registration for ITC Transition of Rs 39 lakhs [Read Order]

The Bombay High Court ordered Restoration of Cancelled GST registration for ITC (Input Tax Credit) Transition of Rs thirty -nine lakhs

The petitioner, Euro Pratik Sales Corporation was registered for the purpose of GST and the petitioner closed his business and applied for cancellation of registration which was later granted. At the time of cancellation, petitioner had to his deemed excise credit a sum of Rupees thirty -nine lakhs.

The petitioner’s case is that petitioner was entitled to claim transition credit in Form GST TRAN-1 under sub-section 3 of Section 140 of the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner applied for transition but due to various reasons, petitioner’s transition could not take place. The petitioner is unable to transit the credit because petitioner’s registration has been cancelled.

Sub-section 1 of Section 29 of CGST Act provides for a party to apply for cancellation on his own motion. Sub-section 2 of Section 29 provides for the proper officer to cancel the registration of a person on certain situations mentioned therein.

Sub-section 3 of Section 29 provides cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Actor to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.

Section 30 of CGST Act provides for revocation of cancellation of registration but that only envisages situations where a registration is cancelled by the proper officer on his own motion.

The Counsel for the petitioner submitted that it is for this reason that the portal, which is the common portal for State GST as well as Central GST, in its manual for revocation of cancelled registration provides “How can I apply for revocation of cancellation of registration done by the Tax Official suo motu?” There is no provision for application for revocation of the cancellation of registration or restoration of the registration in circumstances similar to the case at hand.

The Counsel for the Respondent submitted that the petitioner is registered with the State GST and in the petition only the Central Authorities have been made parties and not the State GST.

A Bench consisting of Justice K R Shriram and Justice AS Doctor observed that “Here is a case, in our view, petitioner cannot be permitted to forgo a sum of Rupees thirty-nine lakhs which according to petitioner is entitled to deemed excised credit particularly when under sub-section 3 of Section 29 his liability will continue even after cancellation of registration. It will be wholly unfair if petitioner ends up having to forgo the deemed excise credit of a substantial amount.”

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