Closing ITC Reversal Unsustainable After Registration Restored | HC

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Reversal Of Closing ITC Unsustainable After Registration Restored

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

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied