The Tax Publishers

GST--Input Tax Credit

Registration of Supplier Cancelled With Retrospective Effect--Validity of Denial of Input Tax Credit to Purchaser

CA. Satyadev Purohit

The learned author seeks to analyse as to whether input tax credit can be denied to the purchaser on the ground that the registration of the supplier has been cancelled with retrospective effect, even if the purchase transaction was effected prior to the cancellation of registration.

1. Introduction

Nowadays, the GST taxpayers have been receiving notices to recover/reversal of input tax credit (ITC) on the ground that the registration of the supplier has been cancelled with retrospective effect.

This is also one of the parameters for scrutiny of returns as stated in paragraph 7 of Annexure B relating to Indicative List of Parametere for Scrutiny' of GST Returns givne under the Standard Operanting Procedure for Scrutiny of Returns, (in short SOP) issued by the CBIC under the Instruction No. 02/2022-GST, dt. 22-3-2022.

As per the above instruction, the claim of ITC in respect of supplies from taxpayers whose registrations have been cancelled retrospectively, is one of the parameters for selection of returns for scrutiny.

It has been stated in the above SOP that in case of retrospective cancellation of registration of a supplier, the recipient is not entitled to claim ITC in respect of invoices or debit notes issued after the effective date of cancellation of the registration. Effective date of cancellation of registrations of the suppliers, if any, is made available in relevant tables of FORM GSTR-2A. Accordingly, it may be verified whether the registered person has availed ITC in respect of such invoices or debit notes issued by the suppliers after the effective date of cancellation of their registrations.

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