2025 (4) TMI 302 - HC - GST

Taxpayer Wins GST Registration Reinstatement After Demonstrating Genuine Hardship and Commitment to Compliance

M/s. Tech-Civil Material Testing Laboratory Pvt. Ltd. Versus Office of the Assistant Commissioner (ST), Chennai

The SC revoked the petitioner's GST registration cancellation, finding the non-filing of returns was due to genuine circumstances like a director's death. ... Cancellation of GST registration of the petitioner - non-filing of GST returns - petitioner is willing to file his GST returns and pay the entire tax liabilities along with applicable interest and penalty, if any - HELD THAT:- In this case, the GST registration of the petitioner was cancelled by the respondent vide the impugned order dated 20.01.2022. According to the petitioner, since one of the Directors of the Petitioner-Company died on 08.03.2022, the petitioner was unable to run his business successfully and further, the Consultant engaged by the petitioner has wrongly advised the petitioner that there is no necessity to file returns if there is no business activities, the petitioner had failed to file their returns continuously for a period of 6 months. The reason provided for non-filing of returns and in the considered opinion of this Court, appears to be genuine. The petitioner is directed to file returns for the subject period till date, if not filed, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of 4 weeks from the date of restoration of GST Registration of the petitioner - Petition disposed off. ISSUES PRESENTED and CONSIDEREDThe primary issue considered by the Court was whether the cancellation of the petitioner's GST registration by the respondent was justified, given the circumstances surrounding the non-filing of GST returns. The Court also considered whether the petitioner's willingness to comply with tax liabilities and file the necessary returns warranted the revocation of the cancellation order.ISSUE-WISE DETAILED ANALYSIS1. Justification for Cancellation of GST RegistrationRelevant legal framework and precedents: The cancellation of GST registration is governed by the GST Act, which mandates the filing of regular returns by registered entities. Non-compliance with this requirement can lead to cancellation of registration.Court's interpretation and reasoning: The Court noted that the petitioner's GST registration was canceled due to the non-filing of returns for six consecutive months. The petitioner attributed this lapse to the advice of their consultant, who incorrectly informed them that returns were unnecessary in the absence of business activities. The Court found this explanation to be genuine, particularly considering the petitioner's circumstances, such as the death of a director, which impacted business operations.Key evidence and findings: The petitioner presented evidence of the consultant's advice and the impact of the director's death on business operations. The respondent confirmed the cancellation of registration but acknowledged the petitioner's readiness to comply with tax obligations.Application of law to facts: The Court applied the provisions of the GST Act, which allow for the revocation of cancellation orders if the taxpayer demonstrates a willingness to comply with tax obligations and rectify previous non-compliance.Treatment of competing arguments: The respondent did not oppose the petitioner's request for revocation, acknowledging the petitioner's commitment to fulfilling their tax liabilities. This lack of opposition supported the Court's decision to consider revocation.Conclusions: The Court concluded that the petitioner's explanation for non-compliance was reasonable and that their willingness to rectify the situation justified the revocation of the cancellation order.2. Conditions for Revocation of CancellationRelevant legal framework and precedents: The GST Act provides mechanisms for revoking cancellation orders, subject to compliance with specific conditions to ensure future adherence to tax obligations.Court's interpretation and reasoning: The Court outlined specific conditions that the petitioner must fulfill to benefit from the revocation of the cancellation order. These conditions aimed to ensure that the petitioner would comply with tax obligations moving forward.Key evidence and findings: The Court emphasized the importance of the petitioner filing all outstanding returns, paying due taxes with interest, and adhering to conditions regarding the use of Input Tax Credit (ITC).Application of law to facts: The Court applied the provisions of the GST Act to impose conditions that would facilitate the petitioner's compliance with tax obligations, thereby justifying the revocation of the cancellation order.Treatment of competing arguments: The respondent's acknowledgment of the petitioner's willingness to comply with tax obligations supported the imposition of conditions for revocation, rather than outright opposition to the petitioner's request.Conclusions: The Court concluded that the revocation of the cancellation order was appropriate, provided the petitioner complied with the outlined conditions to ensure future tax compliance.SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: The Court stated, 'The cancellation of registration is hereby revoked, subject to the fulfillment of the following conditions,' highlighting the conditional nature of the revocation.Core principles established: The judgment established that cancellation of GST registration due to non-compliance can be revoked if the taxpayer demonstrates a genuine reason for non-compliance and a commitment to rectify the situation by fulfilling tax obligations.Final determinations on each issue: The Court determined that the petitioner's GST registration cancellation should be revoked, subject to the petitioner filing outstanding returns and paying due taxes with interest within four weeks. The petitioner was prohibited from using unapproved ITC until scrutinized and approved by the competent authority. Failure to comply with these conditions would result in the cessation of the benefits granted under the order.