Madras HC Restores Cancelled GST Registration on Cost and Strict Compliance Conditions

In a recent ruling, the Madras High Court has quashed a GST Cancellation Order, subject to specific payment and strict conditions. The petitioner, Durairaj Ranjith Babu, did not file a GST return for six months straight. Due to this, he was served with a show-cause notice dated 02.02.2023. The petitioner did not submit any response and did not even appear for a personal hearing. As a result, his GST Registration was cancelled by the GST officer in an order dated 10.03.2023. Therefore, the petitioner approached the Madras High Court to challenge the order.

The petitioner stated that he is willing to file for GST registration and also pay all the tax liability along with interest and penalty if the court sets aside the cancellation order.

The court observed that the petitioner could not file an application for revocation of cancellation, as he did not know about the cancellation of his registration within the prescribed time limit. The court stated that this reason seems genuine. Therefore, the court set aside the cancellation order dated 10.03.2023. However, it imposed a few conditions:

• The order is set aside only if the petitioner pays Rs 10,000 to the credit of the Principal Government of Naturopathy Medical College and Hospital within three weeks.
• The GST officer must instruct the GST Network to make changes to the portal to allow the petitioner to file returns and pay taxes, penalties, or fines within 4 weeks.
• The petitioner must file any pending returns, along with taxes, interest, and late fees, within 4 weeks after their GST registration is restored.
• The petitioner cannot use any unclaimed or unused Input Tax Credit (ITC) to pay taxes, interest, fines, or fees.
• Any unused ITC can only be used once it is scrutinised and approved by an authorised officer.
• Only approved ITC can be used to pay future taxes.
• If ITC was earned, it must also be approved before being used.
• If the petitioner does not follow these conditions, the benefits under this order will no longer apply.