While allowing a taxpayer input tax credit (ITC) transition worth Rs39.13 lakh, the Bombay high court (HC) has asked tax authorities to restore the taxpayer's licence, which was cancelled due to the closure of business. After finding that there is no provision on the goods and services tax (GST) network (GSTN) for restoring a cancelled license, the HC allowed the taxpayer to submit a physical application to avail transition of the credit to the new GST regime. GSTN has to restore the registration by 22 November 2022.
In an order on 17 November 2022, the bench of justice KR Shriram and justice AS Doctor says, "It will be wholly unfair if the petitioner ends up having to forgo the deemed excise credit of a substantial amount of Rs39,13,025...petitioner is entitled to deemed excised credit, particularly when under sub-section 3 of Section 29 (of the Central Goods and Services Tax Act -CGST Act), his liability will continue even after cancellation of registration."
Euro Pratik Sales Corp closed its business, and its registration was cancelled on 18 July 2019. At that time, Euro Pratik Sales had a deemed excise credit worth Rs39.13 lakh. It applied for the transition; however, due to various reasons, the transition could not take place.
The bench observed that 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. "It does not factor in a situation as in the present case that is a registered person has applied for cancellation and an application for revocation of such a cancellation or restoration of the registration."
The HC then gave a specific timeline to complete the process. Euro Pratik Sales is asked to submit its application in physical format by 18 November 2022, paying the necessary fee and furnishing the requisite documents. GSTN is asked to consider the application and restore the registration of Euro Pratik Sales on or before 22 November 2022.
"We are giving this short time since pursuant to the order passed by the apex court, the window for Tran-1 and Tran-2 migration is open till 30 November 2022," the bench says.
Tran-1 and Tran-2 are two forms submitted by the taxpayer to avail ITC for GST.
The Bombay HC also directed the nodal officer to forward the order of registration restoration of Euro Pratik Sales to GSTN, which should ensure that the taxpayer is able to apply for migration before the month end.
"if online restoration is not possible, the order will be passed manually and the nodal officer shall forward all those documents to GSTN and GSTN shall consider the said order as if filed online or properly filed and give effect to that in its portal. if it is not resolved by 28 November 2022, petitioner is permitted to file manually for migration of TRAN-1 and TRAN-2 and the nodal officer shall consider the same," the order from HC says.
(Writ Petition No3380 of 2022 (Original) Date: 17 November 2022)