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 continuous failure to file returns and discharge tax liability. The Court emphasized the importance of addressing tax arrears before granting relief, directing the matter to be heard on merits without influence from the interim order for an expeditious resolution in accordance with the law.

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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 liability
The 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 Act
The 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 returns
The 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 petition
The 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 cancellation
The 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.

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