Closing ITC Reversal Unsustainable After Registration Restored | HC

Case Details: Hithaishi Infra Machine vs. Assistant Commissioner ST FAC - [2026] 182 taxmann.com 520 (Andhra Pradesh)

Judiciary and Counsel Details

• R Raghunanadan Rao & T.C.D. Sekhar, JJ.
• Anil Kumar Bezawada for the Petitioner.
• Santhi Chandra, Sr. Standing Counsel for the Respondent.

Facts of the Case

The petitioner received a show cause notice (SCN) proposing cancellation of GST registration on the ground that the principal place of business was not operational. It did not respond to the SCN, and the authority cancelled the registration with retrospective effect. An assessment order confirming the reversal of closing ITC was issued, noting that the petitioner had neither filed Form GSTR-10 nor obtained a new registration to transfer the closing credit. The assessment order was challenged, arguing that the GST registration had been restored. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the impugned assessment order was based on the premise that the registration cancellation was in effect and that it had not complied with the statutory requirements for transfer of closing credit, such as filing Form GSTR-10 or obtaining a new registration. However, it was observed that the registration had been restored in separate proceedings, rendering the cancellation ineffective. As the cancellation ceased to exist, the statutory obligation to reverse the closing ITC did not arise and could not be sustained. Consequently, the Court set aside the assessment order confirming the reversal of the closing ITC and allowed the writ petition.

List of Cases Referred to

• Hithaishi Infra Machine v. Superintendent of Central Tax [2025] 179 taxmann.com 306 (Andhra Pradesh) (para 4).