2021 (5) TMI 167 - HC - GST

Court allows challenge to deficiency memo rejecting Input Tax Credit appeal, orders GST registration revival

Ramakrishnan Mahalingam Versus State Tax Officer (Circle), Goods and Service Tax Officer, Kotagiri., Deputy Commissioner (ST)

The court allowed the writ petition challenging the deficiency memo rejecting the appeal over ineligible Input Tax Credit. It also overturned the ... Cancellation of registration of petitioners - fake ITC - TNGST Act - HELD THAT:- The contention of the respondents herein that the revival of registration is conditional upon the petitioner satisfying tax dues and substantiating its claim of ITC, is misconceived. What is sought for by the petitioner is revocation/revival of registration only, and in the guise of considering the application for revocation, the authorities cannot embark upon the process of assessment - An assessment would have to be made by the authority in terms of Section 73 or other applicable provision after following the procedure set out therein, and it is only in the course thereof that the officer may consider and decide questions of leviability of tax and claim of input tax credit. Thus to state that registration will not be revived since the petitioner has incorrectly availed of ITC would be putting the cart before the horse. In fact, it is seen that the petitioner has filed monthly returns as well as annual returns for the periods January 2017-18 to September 2019-20 and for financial years 2017-18 and 2018-19 and has also remitted late fee for filing of belated returns. Thus, and these being the only conditions that are to be satisfied by the petitioner for grant of revocation of registration, the cancellation of the registration in this case is incorrect and improper. Petition allowed. Issues:1. Challenge to deficiency memo rejecting appeal based on ineligible Input Tax Credit (ITC).2. Challenge to cancellation of GST registration.3. Interpretation of Section 30 of the Tamil Nadu Goods and Services Tax Act, 2017.4. Rejection of applications for revocation of cancellation.5. Dismissal of appeal as withdrawn.6. Misconception regarding revival of registration and assessment process.7. Incorrect cancellation of registration.8. Order for revival of registration and subsequent assessment.Analysis:1. The writ petition challenges a deficiency memo issued by the appellate authority rejecting the petitioner's appeal due to ineligible Input Tax Credit (ITC). The authority instructed the petitioner to remit the amount due for admission of the appeal.2. The petitioner's GST registration was cancelled due to non-filing of returns. The cancellation was challenged in the writ petition along with the rejection of two applications for revocation of the cancellation.3. Section 30 of the Act allows for the revocation of registration. The authority must consider the application and decide whether to revive the registration or reject the application after hearing the petitioner.4. The first application for revocation was rejected due to non-compliance with the notice, and the second was rejected for outstanding interest on tax dues and alleged wrongful ITC claim.5. The petitioner withdrew the appeal, which was subsequently dismissed. The respondents contended that revival of registration is conditional on satisfying tax dues and ITC claims, which was deemed misconceived.6. The court clarified that the revival of registration does not involve an assessment process. The authority should conduct an assessment separately following due procedure.7. It was found that the cancellation of registration was incorrect and improper. The petitioner had fulfilled the necessary conditions for revocation, including filing returns and remitting late fees.8. The court ordered the first respondent to revive the petitioner's registration immediately, allowing for assessment proceedings to follow in accordance with the law. The writ petition was allowed, and connected petitions were closed without costs.