Tvl. Premium Tyres Private Limited Vs Assistant Commissioner
Date: January 1, 2026
Subject Matter
GST Registration Cancellation Revoked Conditional on Compliance and ITC Scrutiny
Summary
The writ petition is allowed, and the cancellation of the petitioner's GST registration is set aside. The Court found the petitioner's reasons for non-compliance (financial constraints and accountant's failure to file returns) to be genuine, subject to specific conditions for filing returns, paying dues, and scrutinizing Input Tax Credit.
Summary of Facts and Dispute:
- Impugned Action: The respondent cancelled the petitioner's GST registration via an order dated 21.06.2025.
- Petitioner's Argument: The petitioner contended that financial constraints and business setbacks prevented him from overseeing GST compliance, leading to a bona fide belief that his accountant would file returns. However, the accountant failed to file GST returns for six months. The petitioner expressed willingness to file all pending returns and pay all applicable tax liabilities, interest, and penalties.
- Core Question of Law: Whether the cancellation of the petitioner's GST registration, attributed to an accountant's oversight amidst genuine financial difficulties, should be revoked to allow the petitioner to rectify non-compliance and fulfill statutory obligations.
Key Legal Issues & Findings:
Revocation of GST Registration Cancellation
The Court, considering the circumstances presented, found the petitioner's reasons for non-compliance to be genuine.
- Genuine Non-Compliance: The Court accepted the petitioner's explanation that financial constraints, business setbacks, and reliance on an accountant who failed to file GST returns for six months constituted a genuine reason for the non-compliance with the Act's provisions within the stipulated time.
- Conditional Revocation: The revocation of the GST registration cancellation is expressly made subject to several conditions, including the filing of all outstanding returns with applicable tax dues, interest, and belated filing fees, and importantly, that any unutilized Input Tax Credit (ITC) must be thoroughly scrutinized and approved by a competent officer before it can be utilized for discharging future tax liabilities.
Ruling:
- Outcome: The impugned order dated 21.06.2025, which cancelled the petitioner's GST registration, is revoked, and the cancellation of registration is hereby set aside.
- Directions: The respondent is directed to instruct the GST Network to modify the web portal to enable the petitioner to file returns and pay tax/penalty/fine within four weeks. The petitioner must then file all pending returns, along with tax dues, interest, and belated filing fees, within four weeks from the date of registration restoration.
- Liberty: It is clarified that payment of tax, interest, or fees cannot be made or adjusted from any unutilized Input Tax Credit (ITC). Any earned or unutilized ITC shall only be allowed to be utilized after scrutiny and approval by the respondent or other competent authority for discharging future tax liability. If any of the conditions are not met by the petitioner, the benefit granted under this order will automatically cease.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This writ petition has been filed challenging impugned order dated 21.06.2025 passed by the respondent.
2. Mr. R.Suresh Kumar, learned Additional Government Pleader, takes notice on behalf of the respondent.
3. By consent of the parties, the main writ petition is taken up for disposal at the admission stage itself.
4. The learned counsel for the petitioner would submit that due to financial constrains and set back business, the petitioner was unable to follow the GST affairs and he was under the bonafide belief that the Accountant would comply all the statutory compliances, including the filing of GST returns. However, the said Accountant had not filed the GST returns for a period of 6 months. Under these circumstances, the GST Registration of the petitioner was cancelled by the respondent vide order dated 21.06.2025.
5. Further, he would submit that the petitioner is willing to file his GST returns and pay the entire tax liabilities along with applicable interest and penalty, if any. Hence, he requests this Court to revoke the order passed by the respondent for cancellation of GST Registration of the petitioner.
6. In reply, the learned Additional Government Pleader appearing for the respondent confirms that the GST registration of the petitioner was cancelled by the respondent vide impugned order dated 21.06.2025 and requests this Court to pass an appropriate order.
7. Heard the learned counsel for the petitioner and the learned Additional Government Pleader for the respondent and also perused the materials available on record.
8. In this case, the GST registration of the petitioner was cancelled by the respondent vide the impugned order dated 21.06.2025. According to the petitioner, due to financial constrains and set back business, the petitioner was unable to follow the GST affairs and he was under the bonafide belief that the Accountant would comply all the statutory compliances, including the filing of GST returns. However, the said Accountant had not filed the GST returns for a period of 6 months. The reason provided for non-compliance with the relevant provisions of the Act within the prescribed time, in the considered opinion of this Court, appears to be genuine.
9. In view of the above, this Court is inclined to revoke the impugned order dated 21.06.2025 passed by the respondent canceling the GST registration of the petitioner. The cancellation of registration is hereby revoked, subject to the fulfillment of the following conditions:
(i) The respondent shall take suitable steps by instructing GST Network, New Delhi to make suitable changes in the architecture of the GST Web portal to allow the petitioner to file the returns and to pay the tax/penalty/fine, within a period of four weeks from the date of receipt of a copy of this order.
(ii) The petitioner is directed to file returns for the period till date, if not filed, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of 4 weeks from the date of restoration of GST Registration of the petitioner.
(iii) It is made clear that such payment of tax, interest, fine/fee etc. shall not be allowed to be made or adjusted from and out of any Input Tax Credit (ITC) which may be lying unutilized or unclaimed in the hands of the petitioner.
(iv) If any ITC has remained unutilized, it shall not be utilised until it is scrutinized and approved by an appropriate or competent officer of the Department.
(v) Only such approved ITC shall be allowed to be utilized thereafter for discharging future tax liability under the Act and Rules.
(vi) If any ITC was earned, it shall be allowed to be utilised only after scrutinising and approving by the respondent or any other competent authority.
(vii) If any of the aforesaid conditions is not complied with by the petitioner, the benefit granted under this order will automatically ceased to operate.
10. With the above directions, this writ petition is disposed of. No cost.