Madras HC allows late petition challenging GST registration cancellation, prioritizing revenue generation over technical limitation periods

The Madras HC allowed a petition despite the appeal being filed beyond the limitation period for challenging GST registration cancellation. The court held that restoring registration would benefit the state by generating revenue rather than causing harm to the department. Relying on precedent, the court determined that keeping petitioners outside the GST regime serves no useful purpose as they would continue business operations. The court emphasized that bringing assessees back into the GST fold would further revenue interests rather than excluding them on technical grounds.

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Issues:
1. Quashing of impugned orders regarding Goods and Service Tax Registration restoration.

Analysis:
The petitioner, engaged in a construction business, sought to quash the order canceling their GST registration due to the failure of their accountant to file returns during the Covid-19 pandemic. The petitioner argued that restoration of registration would benefit the state in revenue collection. The petitioner cited a previous case where the court condoned delays in similar circumstances. The respondents contended that the registration was canceled due to the petitioner's failure to file returns despite a show cause notice. The respondents prayed for dismissal of the writ petition.

The Court considered the submissions and observed that restoring registration would be beneficial for revenue collection. Referring to a previous case, the Court noted that keeping entities out of the GST regime would not serve the interest of revenue. The Court highlighted the importance of bringing petitioners back into the GST fold to ensure legitimate business operations. Consequently, the Court allowed the writ petition subject to certain conditions to safeguard against abuse and ensure compliance with tax regulations.

The Court directed the petitioners to file returns for the period before the cancellation of registration, pay defaulted taxes with interest, and comply with fine and fee requirements within 45 days. Input Tax Credit utilization was regulated, and future tax liabilities were to be paid in cash. The respondents were authorized to impose restrictions to prevent misuse of Input Tax Credit. Upon fulfilling the requirements, the registration would be revived immediately. The respondents were instructed to make necessary changes to the GST Web portal to facilitate compliance by the petitioners within 30 days.

In conclusion, the Court allowed the writ petition with specified conditions to enable the petitioner to revive their GST registration and continue their business activities lawfully. No costs were awarded, and the connected writ miscellaneous petition was closed.

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