GST Registration Revival Ordered; Payment of Tax and Penalties Required

Issue: Whether an order cancelling a GST registration should be quashed as arbitrary and in violation of natural justice, and whether the registration can be revived upon payment of outstanding dues and filing of returns.

Facts:

The petitioner-assessee filed a writ petition challenging an order cancelling their GST registration as arbitrary and in violation of the principles of natural justice.

Decision:

The court held that the issue was covered by the decision in Tvl. Suguna Cutpiece Center v. Appellate Deputy Commissioner (ST) (GST).
The court directed the assessee to file returns for the period prior to the cancellation of registration and pay the defaulted tax along with interest and the fine/fee fixed for belated filing of returns.
The court specified that the payment of tax, interest, fine/fee was not to be made or adjusted from any Input Tax Credit (ITC) lying unutilized or unclaimed in the hands of the assessee.
Upon payment of the tax, penalty, and uploading of returns, the registration was to be revived forthwith.

Key Takeaways:

Revival Upon Payment: GST registration can be revived upon payment of outstanding dues and filing of pending returns.
No ITC Adjustment: Payments for reviving registration cannot be made using unutilized or unclaimed ITC.
Principles of Natural Justice: Even when registrations are cancelled, basic principles of natural justice must be adhered to.
Compliance with Directions: Assessees must comply with the directions of the court regarding the filing of returns and payment of dues for registration revival.
Section 29 of Central Goods and Services Tax Act, 2017/Tamil Nadu Goods and Services Tax Act, 2017: This section deals with the cancellation of GST registrations.
The court is taking a balanced approach, allowing the GST registration to be revived, but only after the tax payer fulfills their outstanding obligations.

HIGH COURT OF MADRAS

Kshema Wind Farm Services

Assistant Commissioner of State Tax

G.K. ILanthiraiyan , J.

W.P.(MD)No. 31245 of 2024

DECEMBER 20, 2024

G. Natarajan for the Petitioner. J.K. Jeyaseelan, Govt. Adv. for the Respondent.

ORDER

1. The present Writ Petition is filed challenging the impugned cancellation of GST Registration Orer in FORM GSTR REG-19 bearing reference number ZA331123066635Q, dated 15.11.2023 passed by the respondent and to quash the same as the same being arbitary and passed in violation of Principles of natural justice and subsequently direct the respondent to restore GST Registration of the Petitioner.

2.Mr.J.K.Jeyaseelan, learned Government Advocate takes notice for the respondent. By consent of both parties, the Writ Petition is taken up for final disposal at the admission stage itself.

3. It is submitted by the learned counsel for the petitioner that the returns have been filed and the appropriate taxes have also been paid and the petitioner is ready to pay any further taxes that may be due, along with late fee and interest, as required under GST Act.

4.At the outset, it is submitted by both the learned Counsel for the petitioner as well as the learned Central Government Standing Counsel for the respondent that the issue stands covered by a series of judgments, commencing with the decision in Tvl.Suguna Cutpiece Center v. Appellate Deputy Commissioner (ST) (GST) and others, wherein, under identical circumstances, this Court has directed the revocation of registration subject to conditions.

5. This Court has been consistently following the directions issued in Tvl.Suguna Cutpiece Center’s case. Relevant portion of the order is extracted hereunder:

“229. In the light of the above discussion, these Writ Petitions are allowed subject to the following conditions:

The petitioners are directed to file their returns for the period prior to the cancellation of registration, if such returns have not been already filed, together with tax defaulted which has not been paid prior to cancellation along with interest for such belated payment of tax and fine and fee fixed for belated filing of returns for the defaulted period under the provisions of the Act, within a period of forty five (45) days from the date of receipt of a copy of this order, if it has not been already paid.

ii.

It is made clear that such payment of Tax, Interest, fine / fee and etc. shall not be allowed to be made or adjusted from and out of any Input Tax Credit which may be lying unutilized or unclaimed in the hands of these petitioners.

iii.

If any Input Tax Credit has remained utilized, it shall not be utilised until it is scrutinized and approved by an appropriate or a competent officer of the Department.

iv.

Only such approved Input Tax Credit shall be allowed for being utilized thereafter for discharging future tax liability under the Act and Rule.

The petitioners shall also pay GST and file the returns for the period subsequent to the cancellation of the registration by declaring the correct value of supplies and payment of GST shall also be in cash.

vi.

If any Input Tax Credit was earned, it shall be allowed to be utilised only after scrutinising and approving by the respondents or any other competent authority.

vii.

The respondents may also impose such restrictions / limitation on petitioners as may be warranted to ensure that there is no undue passing of Input Tax Credit pending such exercise and to ensure that there is no violation or an attempt to do bill trading by taking advantage of this order. viii.On payment of tax, penalty and uploading of returns, the registration shall stand revived forthwith.

viii.

On payment of tax, penalty and uploading of returns, the registration shall stand revived forthwith.

ix.

The respondents shall take suitable steps by instructing GST Network, New Delhi to make suitable changes in the architecture of the GST Web portal to allow these petitioners to file their returns and to pay the tax/penalty/fine.

The above exercise shall be carried out by the respondents within a period of thirty (30) days from the date of receipt of a copy of this order.

xi.

No cost.

xii.

Consequently, connected Miscellaneous Petitions are closed.”

6. In view thereof, the benefit extended by this Court vide its earlier order in Suguna Cutpiece Centre’s case cited supra, may be extended to the petitioner.

7. Accordingly, this Writ Petition is disposed of on the above terms. No costs.