Case Law Details
Kamala Catering Vs Assistant Commissioner (Circle) (Madras High Court)
The Madras High Court recently addressed a case involving the cancellation of GST registration due to non-filing of returns during the COVID-19 pandemic and the petitioner’s ill-health. The court’s decision to restore registration comes with specific conditions, highlighting the complexities faced by businesses during challenging times.
Detailed Analysis: The petitioner, citing the resurgence of COVID-19 and personal health issues, had failed to submit GST returns promptly. This led to the cancellation of their GST registration. In response, the petitioner approached the High Court seeking revocation, relying on legal precedent where similar reliefs were granted.
During the proceedings, the petitioner’s counsel emphasized the adverse impact of the pandemic on business operations, underscoring the inability to meet statutory deadlines. The court acknowledged these challenges, referencing the case of Suguna Cutpiece, where relief was granted under comparable circumstances.
The High Court’s order outlines specific directives for reinstating GST registration. These include mandating the filing of overdue returns within 45 days, payment of tax liabilities with interest, and restrictions on utilizing unclaimed Input Tax Credit (ITC) until scrutinized and approved by tax authorities.
Moreover, the court instructs the tax department to facilitate necessary changes to GST portals to enable compliance with the court’s directives promptly. This proactive approach aims to ease administrative burdens on affected businesses and ensure regulatory compliance under challenging conditions.
Conclusion: In conclusion, the Madras High Court’s decision to restore GST registration amidst the COVID-19 pandemic underscores judicial sensitivity to the operational challenges faced by taxpayers. By balancing relief with regulatory compliance, the court sets a precedent for equitable treatment during exceptional circumstances, emphasizing the importance of procedural fairness and administrative flexibility in tax administration.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner challenges an order of cancellation of GST registration dated 04.03.2022 and seeks revocation thereof. By asserting that the petitioner could not file returns in time on account of ill-health and COVID 19 pandemic, the present writ petition was filed.
2. Learned counsel for the petitioner submits that the petitioner had no business on account of resurgence of the COVID 19 pandemic and had not filed returns. She would file the necessary GST returns in the event of the GST registration being restored. In support of restoration of registration, learned counsel relies upon the judgment of this Court in Suguna Cutpiece v. The Appellate Deputy Commissioner (ST)(GST) and others, W.P.Nos.25048 of 2021 batch (Suguna Cutpiece).
3. Mrs. K. Vasanthamala, learned Government Advocate, accepts notice for the respondent and submits that directions along the lines of Suguna Cutpiece may be issued.
4. Accordingly, this writ petition is disposed of with the following directions:-
i. The petitioner is directed to file returns for the period prior to the cancellation of registration, if not filed, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of forty five (45) days from the date of receipt of a copy of this order.
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 (ITC) which may be lying unutilized or unclaimed in the hands of the petitioner.
iii. If any ITC has remained unutilized, it shall not be utilised until it is scrutinized and approved by an appropriate or competent officer of the Department.
iv. Only such approved ITC shall be allowed to be utilized thereafter for discharging future tax liability under the Act and Rules.
v. The petitioner 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.
vi. If any ITC was earned, it shall be allowed to be utilised only after scrutinising and approving by the respondent or any other competent authority.
vii. On payment of tax, penalty and uploading of returns, the registration shall stand revived forthwith.
viii. The respondent shall take suitable steps by instructing GST Network, New Delhi to make suitable changes in the architecture of the GST Web portal to allow the petitioner to file the returns and to pay the tax / penalty / fine.
ix. The above exercise shall be carried out by the respondent within a period of thirty (30) days from the date of receipt of a copy of this order.
5. The restoration of the GST registration is subject to and conditional upon fulfilling the above conditions.
6. The Writ Petition is disposed of on the above terms. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.
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