Madras HC Restores Bakery’s GST Registration After 6-Month Non-Filing; Sets Strict ITC Conditions

The Madras High Court has allowed a bakery to restore its cancelled GST registration, even after it did not file returns for six months. However, the court added strict conditions for claiming the Input tax credit (ITC).

The petitioner is the owner of a bakery named Amma Shri Sakthi Bakery. Due to financial loss, the firm could not file GST returns for six months. Due to this, the petitioner received an order of GST cancellation dated 08.03.2024. Therefore, the petitioner approached the Madras High Court requesting to restore its GST registration.

The petitioner submitted that they failed to file a GST return because he was facing financial loss. Their consultant also failed to verify the GST return filing. The petitioner also said that he is willing to file his GST return and also came forward to pay all the tax liability and applicable interest, and penalty.

The bench, comprising Justice Krishnan Ramasamy, observed that the petitioner was not in a situation to file a GST return due to the financial loss. The Court carefully reviewed the explanation given for not filing the GST returns on time and stated that the reason is genuine. Therefore, the court revoked the cancellation of registration of GST, but under some conditions. The conditions were as follows:

• The petitioner must file all pending GST returns and pay the tax, interest, and late fees within 4 weeks after its GST registration is restored.
• This payment cannot be made using Input Tax Credit (ITC).
• Any unclaimed or unused ITC can only be used after it is approved by the GST Department.
• Only the approved ITC can be used for future tax payments.

The court clearly mentioned that if the bakery fails to follow any of these conditions, the benefit of restoring the registration will be cancelled automatically.