Case Law Details
Mahesh Kumar Sharma Vijay Sharma Vs Assistant Commissioner (Circle) (Madras High Court)
The Madras High Court recently addressed a significant issue regarding the cancellation of GST registration due to non-filing of returns. In the case of Mahesh Kumar Sharma Vijay Sharma Vs Assistant Commissioner (Circle), the court set forth specific conditions for the restoration of the petitioner’s GST registration, which was cancelled on 08.09.2021.
Background of the Case
The petitioner, Mahesh Kumar Sharma Vijay Sharma, faced cancellation of his GST registration after failing to file returns for a continuous period exceeding six months. A show cause notice was issued on 20.10.2020, and the cancellation order followed nearly a year later. The petitioner sought relief from the Madras High Court, referencing a similar case (W.P.Nos.33227 of 2023) where the court had granted restoration under certain conditions.
Court’s Observations and Judgment
The Additional Government Pleader, Mr. T. N. C. Kaushik, highlighted the petitioner’s lack of clarity regarding the filing status of returns up to the cancellation date. The court noted that non-filing of returns for over six months was the primary reason for cancellation. Drawing parallels with the Suguna Cutpiece v. The Appellate Deputy Commissioner (ST)(GST) case, the court deemed it appropriate to restore the petitioner’s registration under specified conditions.
Conditions for Restoration
The court issued a detailed order outlining the conditions for restoring the petitioner’s GST registration:
1. Filing of Returns and Payment of Dues: The petitioner must file all pending returns for the period before the cancellation and pay the due taxes along with interest and late fees within 45 days of receiving the order.
2. Restriction on Input Tax Credit (ITC): The payment of tax, interest, and fees cannot be made using any unutilized or unclaimed ITC. The ITC must be scrutinized and approved by the department before utilization.
3. Compliance with Future Obligations: The petitioner must file returns and pay GST for periods subsequent to the cancellation, accurately declaring the value of supplies.
4. Revival of Registration: Upon fulfilling the above conditions, including payment and uploading of returns, the registration will be revived immediately.
5. Adjustments in GST Network: The respondents are required to instruct the GST Network to modify the portal architecture to facilitate the filing of returns and payment of dues by the petitioner.
6. Timeframe for Implementation: The entire process of restoration must be completed within 30 days from the receipt of the court’s order.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner assails an order of cancellation dated 08.09.2021 of the petitioner’s GST registration. The petitioner states that a show cause notice dated 20.10.2020 was issued asking the petitioner to show cause as to why his GST registration should not be cancelled. The cancellation order was issued thereafter on 08.09.2021.
2. Learned counsel for the petitioner relies on an earlier order of this Court dated 08.02.2024 in W.P.Nos.33227 of 2023 and related matters.
3. Mr. T. N. C. Kaushik, learned Additional Government Pleader, accepts notice for the respondent. He points out that it is unclear from the affidavit of the petitioner as to whether returns were filed up to the date of cancellation.
4. The reasons set out in the order of cancellation is non filing of returns for a continuous period of more than six months. In Suguna Cutpiece v. The Appellate Deputy Commissioner (ST)(GST) and others, W.P.Nos.25048 of 2021 batch, this Court directed restoration of registration subject to certain conditions. In the over all facts and circumstances, the petitioner is entitled to an order on similar lines.
5. 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, 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 which may be lying unutilized or unclaimed in the hands of the petitioner.
iii. If any Input Tax Credit 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 Input Tax Credit 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 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. On payment of tax, penalty and uploading of returns, the registration shall stand revived forthwith.
viii. 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 the petitioner to file the returns and to pay the tax / penalty / fine.
ix. 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.
6. The restoration of the GST registration is subject to and conditional upon fulfilling the above conditions.
7. W. P. No. 14915 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.16182 and 16184 of 2024 are closed.
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