A court can temporarily suspend a GST registration cancellation to allow a taxpayer to access the portal and file their pending returns.

A court can temporarily suspend a GST registration cancellation to allow a taxpayer to access the portal and file their pending returns.

Issue

How can a taxpayer resolve the procedural deadlock of being unable to file their pending GST returns (which is often a pre-condition for having their registration restored) because their GST registration has already been cancelled, thereby blocking their access to the GST portal?

Facts

• An assessee’s GST registration was cancelled, and their subsequent appeal against this cancellation was rejected by the appellate authority on the grounds of being filed late.
• The assessee then filed a writ petition in the High Court, arguing that the cancellation was unjustified.
• The core problem was a classic “catch-22” situation: the department required the taxpayer to file all pending returns before they would consider restoring the registration, but the taxpayer could not file these returns because the cancelled GSTIN blocked their access to the GST portal.
• As a clear demonstration of their good faith and willingness to comply, the assessee deposited the entire outstanding amount of GST, interest, and late fees with the department, which totaled over ₹22 lakhs.

Decision

The Gujarat High Court, taking a highly pragmatic and solution-oriented view, passed an interim order in favour of the assessee.

• The court noted that the assessee’s voluntary payment of all their dues was clear evidence of their “bona fide intent to comply” with their statutory obligations.
• To break the procedural logjam, the court directed the GST department to temporarily suspend the effect of the registration cancellation for a period of four weeks.
• This temporary suspension would allow the assessee’s GSTIN to become active again on the portal, thereby enabling them to log in and upload and file all of their pending GST returns.
• The court further instructed that once the returns are filed by the assessee, the department must then consider withdrawing the cancellation order in order to fully regularize the assessee’s GST registration status.

Key Takeways

1. Breaking the GST Portal “Catch-22”: This order is a perfect example of a court using its writ jurisdiction to find a practical solution to a common procedural deadlock that is created by the GST system’s own rules. The court’s order to temporarily suspend the cancellation is the key that unlocks the portal.
2. Demonstrating Your Good Faith is Crucial: The assessee’s case was significantly strengthened by the fact that they had already paid the entire disputed tax, interest, and late fees. This proactive step showed the court that they were serious about becoming compliant and were not just trying to delay the payment of their dues.
3. The Ultimate Goal is Compliance: The court’s approach reinforces the idea that the ultimate objective of the tax system is to bring taxpayers into compliance and to collect the revenue that is due, not to permanently lock businesses out of the formal tax system for past defaults.
4. Interim Orders Can Provide Immediate and Effective Relief: Awaiting a final judgment in a case can take a very long time, during which a business can suffer irreparable harm. An interim order like this provides immediate, practical relief that allows the business to get back on track while the final legal formalities are being completed.