HC Restores Cancelled GST Registration After Assessee Commits to Clear All Dues

The petitioner, an Erode resident, challenged the Assistant Commissioner’s order dated 03/03/2023 that cancelled his GST registration in a writ petition before the High Court. The petitioner claims that he had not been able to file his GST returns consistently for six months because of a lack of manpower. The assessee promised to pay off his tax debts, including any applicable interest and penalties, and to file all outstanding returns in front of the court.

The petitioner further requested revocation of the cancellation to enable him to regularize compliance. The respondent confirmed the cancellation but left it to the Court to decide on restoration.

Issue Before Court: Is it possible to reinstate a GST registration that was cancelled due to non–filing of returns when the taxpayer indicates that they are willing to pay the outstanding balance, including interest and penalties?

Court’s Order: The Court granted the writ petition, concluding that restoration was warranted to guarantee compliance and that the petitioner’s explanation for not filing returns seemed sincere. Subject to certain restrictions, the Court revoked the cancellation order dated March 3, 2023.

Within four weeks, the petitioner was ordered to pay Rs. 5,000 to the Medical College and Hospital and to provide documentation of the payment. In order for the petitioner to file all outstanding returns and pay any outstanding taxes, interest, or late fees within four weeks of restoration, the respondent must direct the GST Network to re-enable the petitioner’s registration after proof is received. The Court made it clear that until it was examined and authorised by a qualified officer, outstanding tax obligations and penalties could not be deducted from unused Input Tax Credit (ITC). For future tax obligations, only properly authorized ITC would be available. The Court issued a warning that the benefit would be immediately revoked if any of the conditions were not met. With these directions, the writ petition and connected misc. petitions were disposed of.

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