Madras HC Orders GST Registration Restoration under Strict Conditions

A.R.J. Engineering Works Vs Deputy Commissioner (ST) (Madras High Court)

Background: The petitioner, A.R.J. Engineering Works, sought to challenge the cancellation of their GST registration and requested its revocation. The petitioner claimed that due to ill-health, they were unable to file their GST returns on time, leading to the cancellation of their registration.

Petitioner’s Argument: The petitioner, through their counsel, argued that they made attempts to file GST returns and appealed against the registration cancellation in 2024. However, these appeals were dismissed on the grounds of being time-barred. The counsel referenced a previous order by the Madras High Court on 08.02.2024 in W.P.No.33227 of 2023, suggesting that a similar decision be applied to their case.

Respondent’s Argument: Mr. V. Prashanth Kiran, representing the government, acknowledged the petitioner’s notice and highlighted the conditional nature of the court’s decision in the case of Suguna Cutpiece v. The Appellate Deputy Commissioner (ST) (GST) and others, dated 31.01.2022. He suggested that the petitioner should adhere to the same conditions stipulated in that case.

Court’s Decision: Given the arguments, the court decided it was unnecessary to adjudicate the merits of the case. Instead, it chose to follow the precedent set by the Suguna Cutpiece case, imposing several strict conditions on the petitioner for the restoration of their GST registration. The directions were as follows:

1. Filing Past Returns: The petitioner must file GST returns for the period before the registration was canceled, including payment of any due taxes, interest, and late filing fees within 45 days from the receipt of the court’s order.
2. Restriction on Input Tax Credit (ITC): Payments of tax, interest, fines, and fees must not be made or adjusted using any unutilized or unclaimed ITC. If any ITC remains unutilized, it must be scrutinized and approved by a competent department officer before being used.
3. Approval of ITC: Approved ITC can only be used for discharging future tax liabilities under the relevant Act and Rules.
4. Filing Future Returns: The petitioner must file GST returns and pay taxes for the period after the registration cancellation, declaring the correct value of supplies.
5. Utilization of Earned ITC: Any earned ITC will only be allowed after scrutiny and approval by the appropriate authorities.
6. Revival of Registration: Upon payment of tax, penalty, and uploading of returns, the petitioner’s GST registration will be revived immediately.
7. GST Network Adjustments: The respondents are required to instruct GST Network, New Delhi, to make necessary changes in the GST Web portal architecture to allow the petitioner to file returns and pay the required amounts.
8. Time Frame for Compliance: The respondents must complete these adjustments within 30 days of receiving the court order.
9. Conditions for Restoration: The restoration of the GST registration is contingent upon the petitioner fulfilling all the above conditions.

Conclusion: The Madras High Court disposed of the petitions W.P.Nos.12785 & 12786 of 2024 under these terms, with no costs. All connected miscellaneous petitions were also closed. This ruling underscores the court’s stance on ensuring compliance with tax obligations while providing a pathway for businesses to rectify their lapses due to genuine reasons such as ill-health, subject to strict conditions to maintain the integrity of the tax system.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

The respective petitioner herein challenges an order of cancellation of registration and seeks revocation thereof.

2. By asserting that the respective petitioner could not file returns in time on account of ill-health, the present writ petitions were filed.

3. Learned counsel for the respective petitioner submits that the respective petitioner endeavoured to file GST returns and presented appeals against the cancellation of registration in 2024, but the appeals were not received on the ground of limitation. By placing reliance on an earlier order of this Court dated 08.02.2024 in W.P.No.33227 of 2023 batch, learned counsel submits that a similar order be passed in this case.

4. Mr. V. Prashanth Kiran, learned Government Advocate, accepts notice on behalf of the respondents. He submits that the order issued in Suguna Cutpiece v. The Appellate Deputy Commissioner (ST) (GST) and others (W.P.Nos.25048, 25877, 12738 of 2021 etc., batch) dated 31.01.2022 (Suguna Cutpiece), was a conditional order and that the respective petitioner should be directed to comply with all conditions stipulated therein.

5. In view of the said submissions, it is not necessary to adjudicate these matters on merits. Instead, by following the decision in Suguna Cutpiece, these writ petitions are disposed of by issuing the following directions:

i. The respective petitioner herein 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 petitioners.

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 respective 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 respective 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.Nos.12785 & 12786 of 2024 are disposed of on the above terms. No costs. Consequently, connected miscellaneous petitions are closed.