HC Restores Cancelled GST Number, Orders Tax Payment Without ITC Adjustment

The Madras High Court has recently given relief to a company by restoring its cancelled GST registration. The petitioner company, Paari Industries Private Limited, had failed to file GSTR-3B due to the illness of its Director, resulting in the cancellation of its GST number.

The company received a show-cause notice on 05.01.2024, proposing the GST registration cancellation. Later, the company received a GST cancellation order on 15.03.2024. The company claimed that it could not file its return because its director was unwell.

While challenging the order before the High Court of Madras, the company also submitted that it could not file the reply to the show cause notice, as it was only uploaded on the GST portal and no physical copy was sent to the company. This resulted in passing the final order. The learned counsel of the petitioner also submitted that the time limit to file the appeal had already expired, due to which the petitioner was unable to file the appeal.

The bench, comprising Justice Krishnan Ramasamy, observed that the reason for not filing the GST return was genuine, as it was due to the ill health of the Director of the petitioner’s firm. Therefore, the court restored the GST registration under the conditions that:

• The GST department must direct the GST Network to make necessary changes in the GST portal to allow the petitioner to file the returns and to pay the applicable tax or penalty or fine within four weeks.

• The petitioner must file the returns and pay the tax dues along with interest and a late fee, within 4 weeks from the date of restoration.

• The company cannot use any unutilised or unclaimed Input Tax Credit (ITC) to pay this tax, interest, fine or late fee.

• The company cannot use any unutilised or earned ITC without getting approval from the competent officer of the Department. Only the approved ITC can be used to pay future tax liabilities.

The court also stated that the benefit of restoration will be cancelled if the petitioner does not follow these directions given by Court.