GST Registration shall be restored on Payment of Tax, Penalty and Uploading of Returns: Madras HC [Read Judgment]

In a major relief to the taxpayers facing problems with restoration of GST registration even after payment of tax amount, penalty and filing of GST registration, the Madras High Court directed the GST department to restore such registrations in order to avoid problems to the taxpayers and the loss of revenue to the department. Justice C Saravanan was considering a bunch of petitions wherein some of the petitioners have filed these Writ Petitions against the order of the cancellation of GST registration, while, some of the petitioners have filed these Writ Petitions against the order passed in the appeals filed against the order of the cancellation of GST registration. The Court, while allowing the writ petitions, opined that the purpose of GST registration is only to ensure just tax gets collected on supplies of goods or service or both and is paid to the exchequer. “Keeping these petitioners outside the bounds of the GST regime is a self-defeating move as no tax will get paid on the supplies of these petitioners,” the Court said. “May be, organized companies who comply with the requirement of GST enactments may not give business with these petitioners. However, by keeping the petitioners out of the bounds of GST law, the purpose of the Act will not be achieved. It will also not mean that the petitioners will not do business ie., of either supplying goods or services in the unorganised sector. They will still do their business, maybe surreptitiously and clandestinely,” the Court held. Expressing concerns over the problems faced by the petitioners due to non-revival of GST registrations, the Court opined that “They may perhaps not get the opportunity to supply goods or services to established players. They may still supply to smaller players who may not be keen on GST compliance by the petitioners. Not allowing the petitioners to revive their registration is to de-recognize a whole lot of entrepreneurs and to not collect GST at all from them. It will only strain the system, as these petitioners will continue to carry on their business and supply goods and service and/or end up not paying the GST under the respective GST enactments. It will lead to loss of revenue to the Government which is not intended when these enactments were enacted.” Quashing the orders passed by the department, the Court observed that “there are adequate safeguards under the GST enactments which can also be pressed against these petitioners even if their registration is revived so that, there is no abuse by these petitioners and there is enough deterrence against default in either paying tax or in complying with the procedures of filing returns.” “Further, the Government requires tax to meet its expenditure. By not bringing these petitioners within the GST fold, the unintended privilege may be conferred on these petitioners unfairly to not to pay GST should they end supplying goods and/or services without registration. For example, a person renting out an immovable property will continue to supply such service irrespective of registration or not. Therefore, if such a person is not allowed to revive the registration, the GST will not be paid, unless, of course, the recipient is liable to pay tax on a reverse charge basis. Otherwise, also there will be no payment of value-added tax. The ultimate goal under the GST regime will stand defeated. Therefore, these petitioners deserve a right to come back into the GST fold and carry on their trade and business in a legitimate manner,” the Court added. Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates