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2024 (4) TMI 1264 - HC - GSTRevival of GST registration that has been cancelled - petitions filed beyond the prescribed period of limitation - HELD THAT - The issue stands covered in favour of the petitioner in terms of the decision of this Court in Tvl. Natarajapathy Textiles rep. By its Partner A. Siva Prakasam Vs. The Commissioner of Commercial Taxes O/o. the Principal and Special Commissioner of Commercial Taxes Chennai and another 2022 (4) TMI 188 - MADRAS HIGH COURT where it was held that While some of them filed appeal beyond the statutory period of limitation there was further delay in filing the writ petition. However considering the over all facts and circumstances of the case it was held that no useful purpose will be served by keeping those petitioners out of the Goods and Services Tax regime as such assessee would still continue to do business and supply goods/services. By not bringing them back to the Goods and Services Tax fold/regime would not further the interest of the revenue. The petitioner is directed to comply with the directions contained in the above case. Petition allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court revolve around the revival of GST registration that has been cancelled, specifically:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Revival of GST Registration Despite Delay in Filing Appeals or Writ Petitions Relevant legal framework and precedents: The Court relied heavily on its earlier decision in W.P.(MD) No. 3181 of 2022, which in turn referred to the batch of writ petitions including Tvl. Suguna Cutpiece Center Vs Appellate Deputy Commissioner (ST) (GST) dated 31.01.2022. These precedents established that delay in filing appeals or writ petitions for revocation of cancellation does not necessarily bar revival if the overall facts justify it. Court's interpretation and reasoning: The Court emphasized that keeping petitioners out of the GST regime despite their ongoing business activities defeats the purpose of the GST enactments. It reasoned that non-revival would allow petitioners to continue supplying goods or services without tax compliance, which is contrary to the interest of revenue and public policy. Key evidence and findings: The Court noted that petitioners continue to conduct business and supply goods/services even after cancellation, which implies a need to bring them back into the GST fold to ensure tax compliance. Application of law to facts: The Court applied the principle that the GST regime aims to integrate all taxable persons for proper tax collection and compliance. The refusal to revive registration on technical grounds of delay would be counterproductive. Treatment of competing arguments: While the department might argue that limitation periods are mandatory, the Court balanced this against the practical realities and the overarching goal of tax collection. Conclusion: The Court held that revival of registration should be allowed despite delay, subject to safeguards. Issue 2: Safeguards and Conditions Governing Revival of Cancelled GST Registration Relevant legal framework and precedents: The Court referred to detailed conditions laid down in the earlier order dated 22.03.2022 in W.P.(MD) No. 3181 of 2022, which sets out specific safeguards to prevent abuse. Court's interpretation and reasoning: The Court recognized the need for safeguards to prevent misuse of revived registration, including ensuring payment of outstanding tax dues, interest, fines, and fees. It also highlighted the importance of scrutinizing Input Tax Credit claims to prevent bill trading or undue passing of ITC. Key evidence and findings: The Court found that the GST enactments and rules, along with clarifications from the Central Government and GST Council, intend to facilitate genuine taxpayers rather than permanently debar them. Application of law to facts: Applying these principles, the Court directed petitioners to file all pending returns, pay outstanding dues in cash (not from ITC), and submit to departmental scrutiny of ITC claims before utilization. Treatment of competing arguments: The Court balanced the department's concern for revenue protection against the petitioners' right to carry on business legitimately. Conclusion: Revival is allowed subject to strict adherence to conditions including payment of dues, restricted ITC utilization, and departmental oversight. Issue 3: Procedural Obligations and Technological Facilitation for Revival Relevant legal framework and precedents: The Court referred to procedural directives from prior judgments and GST rules concerning filing of returns and payment of taxes. Court's interpretation and reasoning: The Court mandated that upon compliance with conditions, registration shall be revived forthwith. It also directed the respondents to coordinate with GST Network to enable filing of returns and payment of dues through the GST portal within 30 days. Key evidence and findings: The Court acknowledged the need for technological facilitation to operationalize revival orders effectively. Application of law to facts: The Court's directions ensure that revival is not merely theoretical but practically implemented through system changes. Treatment of competing arguments: No significant opposition noted; the Court's order focuses on administrative efficiency. Conclusion: The department must take prompt steps to enable revival via GST Network portal. 3. SIGNIFICANT HOLDINGS The Court preserved and reiterated the following crucial legal reasoning verbatim from the earlier order: "Since, no useful will be served by not allowing persons like the petitioners to revive their registration and integrate them back into the main stream, I am of the view that the impugned orders are liable to be quashed and with few safeguards." "There are adequate safeguards under the GST enactments which can also be pressed against these petitioners even if their registration are 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." "The provisions of the GST Enactments and the Rules made there under read with various clarifications issued by the Central Government pursuant to the decision of the GST Council and the Notification issued thereunder the respective enactments also make it clear, intention is to only facilitate and not to debar and derecognised assesses from coming back into the GST fold." The Court established the core principle that the GST regime's ultimate goal is to integrate all taxable persons to ensure tax compliance and revenue collection, and that technical delays in filing appeals or writ petitions should not permanently exclude taxpayers from the regime. Final determinations include:
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