2021 (6) TMI 75 - HC - GST

High Court Sets Aside Interim Order on GST Registration; Emphasizes Tax Arrears Resolution

The High Court set aside the interim order allowing manual filing of returns and stay on cancellation of GST registration due to the respondent company's ... Cancellation of registration of petitioner - seeking specific direction to the respondent to permit the petitioner to file GSTR-3B manually while enabling credit without insisting for cash portion of tax liability - HELD THAT:- The GST laws do not permit for filing of manual returns. There is no facility under the law to accept manual returns and by allowing respondent No.1 to file returns manually will certainly unsettle the entire scheme of GST and therefore, on this ground alone, the interim order passed by the learned Single Judge deserves to be set aside - In the instant case, the registration of respondent No.1 is not in existence. The registration was cancelled for non-filing of its returns for a continuous period of more than two years and by granting an interim order, respondent No.1 has been permitted to continue its business as a registered dealer even though the law prescribes that a person, who does not file returns for a continuous period of 6 months, is liable to be deregistered. In the present case, the total outstanding liability as reflected from the record prima facie appears to be ₹ 16,83,45,476/- (tax amount) plus interest as applicable and penalty of ₹ 1,70,71,385/- and therefore, unless and until its liability is satisfied, such an interim order should not have been granted in the peculiar facts and circumstances of the case - Appeal allowed. Issues:1. Failure to file GST returns and discharge tax liability.2. Challenge to assessment orders under CGST Act.3. Cancellation of GST registration due to non-filing of returns.4. Legal challenges and prayers in the writ petition.5. Interim order allowing manual filing of returns and stay on cancellation.Issue 1: Failure to file GST returns and discharge tax liabilityThe respondent company, engaged in the sale of goods, failed to file GST returns in Form GSTR 3-B and discharge its tax liability for a period from September 2018 onwards. Assessment orders were issued under Section 62 of the CGST Act directing the company to file returns and pay arrears.Issue 2: Challenge to assessment orders under CGST ActThe respondent challenged the assessment orders in appeals and writ petitions, alleging non-compliance with statutory pre-deposit requirements. The company's failure to file returns led to cancellation of GST registration by the authorities.Issue 3: Cancellation of GST registration due to non-filing of returnsThe respondent's continuous failure to file returns for 6 months resulted in cancellation of GST registration. The company also faced cancellation for not responding to notices and failing to appear for scheduled hearings regarding registration cancellation.Issue 4: Legal challenges and prayers in the writ petitionThe writ petition sought quashing of registration cancellation and assessment orders, allowing manual filing of returns, and permission to pay tax dues in installments under Section 80 of the CGST Act. The petitioner argued that cancellation of registration and assessment orders were arbitrary and violated principles of natural justice.Issue 5: Interim order allowing manual filing of returns and stay on cancellationThe learned Single Judge granted an interim order staying the cancellation of registration, permitting manual filing of returns, and reserving the revenue's right to consider installment payment requests. The interim order was challenged on the grounds that manual returns were not permitted under GST laws and that the company had admitted to not filing returns since 2018.In conclusion, the High Court set aside the interim order, emphasizing the importance of addressing the outstanding tax liability before granting such relief. The Court directed the matter to be heard on merits without influence from the interim order, highlighting the need for expeditious resolution in accordance with the law.