Facts of the Case

The petitioner’s GST registration was cancelled by the Proper Officer with effect from 31.07.2022 under Section 29 of the CGST Act, 2017 on the ground that GST returns had not been filed continuously for six months.

The petitioner submitted that due to ill-health during the COVID-19 pandemic and continuous medical treatment, GST returns could not be filed within the prescribed time. Consequently, the petitioner was also unable to file the statutory appeal against the cancellation order within the limitation period.

The petitioner approached the Madras High Court seeking quashing of the cancellation order and restoration of GST registration.

Issues Involved

  1. Whether GST registration cancelled for continuous non-filing of returns under Section 29 can be restored by the High Court.
  2. Whether genuine circumstances such as illness during the pandemic justify granting relief despite expiry of the statutory appeal period.
  3. Whether the benefit granted in Tvl. Suguna Cutpiece Centre should also be extended to the petitioner.

Petitioner's Arguments

  • The petitioner was suffering from serious health issues during the pandemic and was under medical treatment.
  • Because of the medical condition, GST returns could not be filed within the prescribed time.
  • The petitioner also could not prefer the statutory appeal within the limitation period.
  • The petitioner relied upon the judgment of Tvl. Suguna Cutpiece Centre vs Appellate Deputy Commissioner (ST) (GST) & Others, wherein the High Court had permitted restoration of cancelled GST registrations subject to specified conditions.
  • It was argued that the present case was identical and deserved similar relief.

Respondent's Arguments

The respondent relied upon the cancellation order issued under Section 29 of the CGST Act, 2017, stating that the registration had been cancelled because the petitioner failed to file GST returns continuously for six months.

Court Order / Findings

The Madras High Court observed that identical issues had already been decided in Tvl. Suguna Cutpiece Centre, and the directions issued therein had consistently been followed in several subsequent judgments.

The Court also noted that the Revenue Department had accepted the principles laid down in the earlier judgment, as no appeal had been preferred against those decisions.

Accordingly, the Court extended the same benefit to the petitioner and directed that the matter shall be governed by the conditions prescribed in paragraph 229 of Tvl. Suguna Cutpiece Centre.

The Court reiterated that:

  • The petitioner shall file all pending GST returns.
  • Outstanding tax, interest, penalty, fine and late fee shall be paid.
  • Such payment shall be made in cash and not through unutilized Input Tax Credit.
  • ITC shall be available only after proper scrutiny and approval by the competent authority.
  • GST returns for the post-cancellation period shall also be filed.
  • Upon compliance with the prescribed conditions, the GST registration shall stand revived.

The writ petition was accordingly allowed on the same terms as laid down in Suguna Cutpiece Centre.

Important Clarification

This judgment reiterates that cancellation of GST registration for continuous non-filing of returns is not always irreversible. Where genuine reasons exist and the taxpayer is willing to comply with statutory requirements, the High Court may exercise its writ jurisdiction to restore GST registration by following the principles laid down in Tvl. Suguna Cutpiece Centre.

The decision also emphasizes that restoration is conditional upon payment of pending tax liabilities, filing of all pending returns, and compliance with the safeguards relating to Input Tax Credit.

 

Link to Download the Order- https://www.mytaxexpert.co.in/uploads/1784092027_945compressed.pdf

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