HC sets aside BJA when GST returns are filed subsequent to GST Restoration [Read Order]

The Madras High Court in the matter of M/s.Anand Cini Services Private Limited Vs. The State Tax Officer sets aside BJA (best judgment assessment) when GST returns are filed subsequent to GST Restoration.

The petitioner is a registered taxpayer under the GST Act and carrying on the business of leasing out motion pictures, equipments, and occasionally, produces motion pictures. The petitioner has been regular in filing the GST returns and remitting taxes.

While so, because of the sudden demise of their GST consultant due to covid, they were unable to file the GST returns from the year 2019 onwards and hence, their registration was cancelled with effect from 01.03.2020, by order dated 11.03.2020. Due to the outbreak of Covid-19 pandemic, the petitioner was unable to take immediate measures for restoration of his GST registration, however, in the interregnum period, the 1st respondent initiated assessment proceedings against the petitioner for having violated the provisions of Section 6(2)(b) of the GST Act and subsequently, issued personal hearing notices for the Assessment Years 2019-20, 2020-21, 2021-22 and 2022-23 and passed the best judgment assessment orders by taking into account of the turnover reported prior to the cancellation of GST registration and initiated the recovery proceedings against the petitioner by attaching the petitioner’s Bank Account on 10.01.2023 and another Bank Account on 09.02.2023 without any prior intimation to the petitioner or raising any demand.

Challenging the said best judgment assessment orders and the attachment orders passed by the respondents, the petitioner has filed the present writ petitions.

The learned counsel appearing for the petitioner would submit that the GST registration of the petitioner has been cancelled by the 1st respondent with effect from 01.03.2020, by an order dated 11.03.2020, owing to which, the petitioner could not file his GST returns. Hence, the petitioner filed an application for revocation of his cancelled GST registration on 22.04.2023 and the said application was allowed, subsequently, the registration was restored by the 2nd respondent, viz., Assistant Commissioner (ST), Pondy Bazaar Assessment Circle, Chennai – 28, by an order dated 28.04.2023. Thereafter, the petitioner has filed the GST returns for all the default Assessment Years mentioned above.

Therefore, the learned counsel would submit that, in the present case, the assessment orders have been passed on the basis of the best judgment assessment and in view of the fact that the petitioner filed the returns for the Assessment Years 2019-20 to 2022-23, subsequent to the restoration of the cancelled GST registration, the said impugned orders passed by the respondent has to be set aside and the consequential orders attaching the petitioner’s bank accounts have to be lifted. Therefore, the learned counsel appearing for the petitioner prayed for allowing all the writ petitions.

The learned Additional Advocate General appearing for the respondents by referring to the instructions at Para Nos. 2, 3, 4, 5 and 6 of the letter dated 02.12.2023 of the Assistant Commissioner (ST), Pondy Bazaar Assessment Circle, Chennai – 28 fairly submitted that since in the present case, the petitioner had filed returns for all the periods as mentioned above, the best judgment assessment orders passed by the 1st respondent has to be set aside and therefore, 1st respondent may be directed to make fresh assessment based on the returns filed by the petitioner.

Heard the learned counsel appearing for the petitioner as well as the learned Additional Advocate General appearing for the respondents and perused the materials on record.

This Court is of the considered view that since the petitioner has filed the returns for the Assessment Years 2019-2020 to 2022-23 subsequent to restoration of GST Registration, the best judgment assessment orders passed by the 1st respondent dated 22.11.2022 and 25.11.2022, which are under challenge in WP Nos.4675, 4676, 4677 and 4684 of 2023 are liable to be set aside and the 1st respondent has to pass fresh assessment orders.

Accordingly, the Writ Petitions are allowed, the impugned orders are set aside and respondents are directed to pass fresh assessment orders, based on the returns filed by the petitioner for the Assessment Years 2019-2020 to 2022-23. Since the impugned best judgment assessment order is set aside, the consequential bank attachment order dated 20.02.2023 passed by the Assistant Commissioner (ST), Pondy Bazaar Assessment Circle, Chennai – 28, which is under challenge in WP No.7312 of 2023 is stand lifted to the entire extent.

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