GST Registration Cancellation Overturned: Petitioner Must File Returns, Pay Taxes with Interest, and Accept Input Tax Credit Restrictions

The HC allowed the writ petition challenging GST registration cancellation, subject to specific conditions. The petitioner must file all outstanding returns, pay defaulted tax with interest, and pay fines for late filing. Restrictions were placed on utilizing Input Tax Credit, requiring scrutiny and approval before use for future tax liabilities. The petitioner must pay GST in cash for periods after cancellation. Upon compliance with all conditions, including tax payment, penalties, and return filing, the registration would be immediately restored. No costs were imposed.

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Issues:
Cancellation of GST registration for alleged non-filing of returns.

Analysis:
The petitioner, a dealer under the GST regime, had their registration cancelled by the respondent for alleged non-filing of returns. The writ petition sought a writ of certiorari to quash the cancellation order. The issue was whether the cancellation was justified.

The High Court referred to a detailed judgment in a batch of cases related to similar issues. In that judgment, the court allowed the writ petitions subject to certain conditions. The conditions included filing returns for the period prior to cancellation, payment of defaulted tax with interest, and fines for belated filing. The court also restricted the use of unutilized Input Tax Credit and required scrutiny and approval for its utilization.

The court directed that approved Input Tax Credit could be used for discharging future tax liabilities. It also mandated the payment of GST in cash for subsequent periods post-cancellation. The court imposed restrictions to prevent undue passing of Input Tax Credit and prohibited bill trading. Upon compliance with tax payment, penalty, and return filing, the registration would be revived immediately.

Applying the principles laid down in the referenced judgment to the present case, the High Court disposed of the writ petition in line with the directions given by the previous judge. The petitioner was granted the same benefits as outlined in the earlier judgment. The writ petition was ordered accordingly, with no costs imposed, and connected miscellaneous petitions were closed.

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