Madras HC Revokes GST Cancellation Because Nil Returns Filed Due to Genuine Financial Hardship

Johnson Justin Vs State Tax officer (Madras High Court)

The Madras High Court considered a writ petition challenging the order dated 24.05.2022 cancelling the petitioner’s GST registration. The petitioner submitted that due to financial and health problems, he had not carried out any business transactions and had filed “Nil” returns for three consecutive years. Consequently, his GST registration was cancelled. He expressed willingness to file pending returns and pay the entire tax liability along with applicable interest and penalty, and sought revocation of the cancellation, stating that obtaining a new GST registration would cause difficulty.

The respondent confirmed cancellation of the registration and requested appropriate orders. Upon hearing both sides and perusing the materials, the Court observed that the reasons assigned by the petitioner appeared genuine.

The Court revoked the cancellation order dated 24.05.2022, subject to conditions. The respondent was directed to instruct the GST Network to make necessary changes in the GST portal within four weeks to enable filing of returns and payment of tax, penalty, and fine. The petitioner was directed to file all pending returns and pay tax dues, interest, and belated filing fees within four weeks from restoration of registration.

The Court clarified that such payments shall not be made or adjusted using any unutilized or unclaimed Input Tax Credit (ITC). Any unutilized ITC shall not be used until scrutinized and approved by the competent authority. Only approved ITC may thereafter be utilized for future tax liability. If the petitioner fails to comply with the conditions, the benefit granted under the order shall automatically cease. The writ petition was disposed of without costs.