Case Law Details
E. Dharmaraj Vs Assistant Commissioner of State Tax (Madras High Court)
In a recent ruling by the Madras High Court in the case of E. Dharmaraj Vs Assistant Commissioner of State Tax, the court addressed the issue of erroneous GST return filings leading to the cancellation of GST registration. The petitioner, Mr. E. Dharmaraj, challenged the cancellation of his GSTIN (Goods and Services Tax Identification Number) by the respondent, the Assistant Commissioner of State Tax, dated 03.02.2023.
Mr. Dharmaraj, an illiterate owner-cum-driver of a lorry, had obtained GST Registration No. 33AQRPD0201D1ZO in May 2018 under the trade name of M/s. Selvi Transport. He engaged the services of an auditor for filing GST returns, providing all necessary login credentials. However, the auditor, without proper instructions, continuously filed NIL GSTR-1 and GSTR-3B returns instead of reporting actual outwards supplies. Consequently, the respondent cancelled Mr. Dharmaraj’s GST registration, presuming non-commencement of business.
Despite actively conducting his transport business and invoicing over Rs. 25 lakhs between June 2023 and October 2023, Mr. Dharmaraj couldn’t recover payments due to the inactive GSTIN. Only upon discovering the cancellation order did he seek restoration of his GST registration through this writ petition.
In defense, the respondent argued that Mr. Dharmaraj accepted the cancellation by filing GSTR-10 returns, implying inconsistency in his actions.
However, the court observed that the cancellation stemmed from the auditor’s errors, not Mr. Dharmaraj’s conduct. Despite providing clear instructions, the auditor filed incorrect returns, even after being aware of the registration cancellation. The court acknowledged Mr. Dharmaraj’s genuine transactions and directed the restoration of his GST registration.
The court instructed Mr. Dharmaraj to formally apply for restoration within one week, with the respondent directed to revoke the cancellation within two weeks thereafter.
In conclusion, the Madras High Court’s decision underscores the importance of accurate GST filings and the repercussions of auditor errors. The case highlights the judiciary’s role in rectifying administrative lapses and ensuring justice for affected parties.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This Writ Petition has been filed challenging the impugned order of cancellation of GSTIN passed by the respondent dated 03.02.2023.
2. Ms. S. Akila, learned counsel appearing for the petitioner would submit that the petitioner is an illiterate and working as a owner-cum-driver of lorry since the age of 25 years. The petitioner has obtained GST Registration No.33AQRPD0201D1ZO in the month of May 2018 in the trade name of M/s. Selvi Transport. For the purpose of filing GST returns, the petitioner has engaged the services of an auditor and has provided him with all the login credentials pertaining to GST portal.
3. While so, when the petitioner’s business is covered under Goods Transport Agency for which the liability for paying GST is on the service recipient under Reverse Charge Mechanism, the auditor engaged by the petitioner has been continuously filing NIL GSTR-1 and GSTR-3B returns instead of showing the actual outwards supplies. Therefore, on the presumption that the petitioner has not commenced any business, the respondent had cancelled the GST registration of the petitioner vide the impugned order dated 03.02.2023.
4. Though the petitioner had been successfully carrying on his transport business and raised an invoice to the tune of Rs.25,03,905/-during the period between June 2023 and October 2023, the said payment has been kept on hold by the client for want of active GSTIN. Only thereafter, it came to the knowledge of the petitioner that the GST registration has been cancelled by virtue of the impugned order dated 03.02.2023. Unless otherwise GST registration is restored, the petitioner is in no position to recover the invoice amount and hence, the petitioner has prayed for setting as the impugned order.
5. Per contra, Ms. E. Ranganayaki, learned Additional Government Pleader appearing on behalf of the respondent would submit that though the revocation of the GST registration was made in the month of February 2023, the petitioner has raised invoices to the tune of Rs.25,03,905/-during the period between June 2023 and October 2023. She would further submit the petitioner had been filing NIL returns continuously and pursuant to the same, when the GSTIN registration was cancelled by the respondent, the petitioner had also filed GSTR-10 and the same has also been accepted by the department. Hence, learned Additional Government Pleader prayed for dismissal of the writ petition.
6. I have duly considered the submissions made by the learned counsel appearing on behalf of the petitioner and the learned Additional Government Pleader appearing on behalf of the respondent/department.
7. Upon perusal of the documents, it is crystal clear that the GSTIN registration of the petitioner came to be cancelled by virtue of the impugned order. Further, it is an admitted fact that the petitioner is working as a owner-cum-driver of lorry since the age of 25 years and has obtained GST Registration No.33AQRPD0201D1ZO in the month of May 2018 in the trade name of M/s. Selvi Transport. For the purpose of filing GST returns, the petitioner has engaged the services of an auditor and has provided him with all the login credentials pertaining to GST portal. However, without taking proper instructions from the petitioner, the auditor has filed NIL GSTR-1 and GSTR-3B returns instead of showing the actual outwards supplies and therefore, on the presumption that the petitioner has not commenced any business, the respondent had cancelled the GST registration of the petitioner. However, without taking steps to restore the cancelled GSTIN, the auditor has filed GSTR-10 and accepted the cancellation.
8. According to the learned Additional Government Pleader appearing on behalf of the respondent, the petitioner having accepted the cancellation by filing GSTR-10 returns, the petitioner was not supposed to have raised invoices for the period between June 2023 to October 2023. It is a common knowledge that no prudent man would have raised invoices after accepting the cancellation by filing GSTR-10 returns. In the instant case on hand, the reason assigned by the petitioner appears to be genuine. Though the petitioner has given proper instructions to the auditor, the auditor has filed NIL GSTR-1 and GSTR-3B returns and has also filed GSTR-10 returns after knowing about the cancellation of GSTIN registration standing in the name of the petitioner.
9. Therefore, for all these reasons, this Court is of the considered view that looking at any aspect it appears that the petitioner had only made genuine transactions and the error had been committed only on the part of the auditor who had filed GSTR-10 returns after knowing about the cancellation of GSTIN registration of the petitioner. Hence, the impugned order is liable to the set aside and the GSTIN registration No.33AQRPD0201D1ZO standing in the name of M/s. Selvi Transport is directed to be restored.
10. At this juncture, it is submitted by the learned Additional Government Pleader appearing on behalf of the respondent that the petitioner has to file a formal application for restoration of GSTIN registration No.33AQRPD0201D1ZO.
11. Considering the submission made by the learned Additional Government Pleader, the petitioner is directed to file an application for restoration of GSTIN registration within a period of one week from the date of receipt of a copy of this order and the respondent shall revoke the cancellation of GSTIN registration No.33AQRPD0201D1ZO within a period of two weeks thereafter.
12. The Writ Petition is disposed of accordingly. No costs. For reporting compliance, list the matter on 21.12.2023.
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