Question ID : 44680

Cancellation of GST Registration on voluntery basis

The client submitted application for cancellation of GST registration on 10 Oct 2020 on voluntery basis. No action from the department till 17 Jun 2024. on 18 Jun 2024 the department communicated an order confirming cancellation of registration w.e.f. 10 Oct 2020. In the mean time the client had issued 3 invoices with GST to his customers. Customers availed ITC. The client paid the GST so collected befiore due date. The client also claimed ITC on purchases for the period from 10 Oct 2020 to 18 Jun 2024. All returns were filed till March 2024. What are the consequences for ITC claimed by client and his customers.

Department is at fault here for their timely inaction, at the same time, the supplier who has applied for cancellation and in the interim, who has done business by issuing a GST tax invoice is also at fault. For the fault of the supplier and the GST Department, the genuine customer who has paid GST, should not be deprived of the Input tax credit.[I assume, even after the application for cancellation, the GST Registration Status was active in the GST PortaI], In my humble opinion, the ITC availment by the Customer is right and valid. However, Department may deny the credit, which is incorrect, and defendable at higher level