2025 (6) TMI 732 - HC - GST

Direction to accept all taxes in the light of Circular No. 238/32/2024 GST vide dated 15th October 2024 - direction to accept all dues of taxes along with interest/penalty/charges if any as per the demand for taxes as per the demand notice - petitioner was served with a demand notice as admittedly petitioner failed to deposit the taxes during the Covid-19 period - HELD THAT - The stand of the Department as disclosed in paragraph 14 of the counter affidavit has not been contested by filing any rejoinder to the said counter affidavit therefore this Court finds that the issues involved in the writ application would be set at rest by simply observing that the petitioner if willing to discharge its liability is free to deposit the amount with the Department in accordance with law and if the deposits are offered by the petitioner the Department shall accept the same towards the discharge of the liability of the petitioner. Application disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter are:

(a) Whether the petitioner, a registered service provider under GST, is entitled to a direction for acceptance of all tax dues, including interest, penalty, and charges, in light of Circular No. 238/32/2024 dated 15th October 2024.

(b) Whether the petitioner can be compelled or prevented from discharging its tax liability despite cancellation of its GST registration.

(c) The applicability and relevance of Circular No. 238/32/2024, which provides for waiver of interest and penalty for certain financial years, to the petitioner's case.

(d) Whether the present writ petition is maintainable or amounts to an indirect appeal/review of a prior order of this Court upholding cancellation of petitioner's GST registration.

2. ISSUE-WISE DETAILED ANALYSIS

(a) Entitlement to Acceptance of Tax Dues in Light of Circular No. 238/32/2024

The petitioner sought a direction to accept all taxes along with interest, penalty, and charges as per the demand notice amounting to Rs. 4,50,506, relying on Circular No. 238/32/2024 dated 15.10.2024. This circular purportedly provides for waiver of interest and penalty for certain periods.

The State's counter affidavit clarified that the circular pertains exclusively to waiver of interest and penalty for the financial years 2017-18, 2018-19, and 2019-20. The demand against the petitioner relates to the financial year 2021-22. Therefore, the circular is not applicable to the petitioner's case.

The Court accepted the State's submission, noting that the circular's scope is limited and does not extend to the petitioner's tax period. The petitioner failed to contest this point by filing any rejoinder affidavit, which further strengthened the State's position.

Thus, the Court held that the petitioner is not entitled to any relief based on the circular and cannot seek waiver of interest or penalty for the disputed period.

(b) Obligation to Discharge Tax Liability Despite Cancellation of GST Registration

The petitioner acknowledged failure to deposit taxes during the Covid-19 period and did not dispute the demand. It sought acceptance of dues along with interest and penalty. The State submitted that cancellation of GST registration does not absolve the petitioner from discharging tax liabilities.

The Court agreed with the State's position, emphasizing that the petitioner remains under a statutory obligation to pay all outstanding taxes, interest, and penalty irrespective of the registration status. The Court noted that partial payment of tax had already been made by the petitioner on 27.02.2024, indicating willingness to comply.

The Court further observed that the petitioner's registration cancellation order had been upheld by this Court in an earlier proceeding, which the petitioner was attempting to challenge indirectly through the present writ petition.

Accordingly, the Court clarified that the petitioner is free to deposit the outstanding amount as per law, and the Department is bound to accept such deposits towards discharge of liability.

(c) Maintainability of the Writ Petition and Attempt to Reopen Earlier Order

The State contended that the writ petition was an attempt to appeal or review the earlier order dated 08.07.2024, which upheld cancellation of the petitioner's GST registration.

The Court concurred with this view, observing that the petitioner's challenge to the registration cancellation was not permissible in the present writ proceeding. The Court found that the issues raised in the writ petition were effectively settled by the prior order and that the petitioner was seeking a re-examination under the guise of a writ petition.

The absence of any rejoinder affidavit disputing the State's stand further indicated that the petitioner did not have a substantive ground to reopen the matter.

3. SIGNIFICANT HOLDINGS

"The Circular No. 238/32/2024 dated 15.10.2024 would not be relevant and applicable in the case of the petitioner as it pertains to waiver of interest and penalty for the years 2017-18, 2018-19 and 2019-20, whereas the demand raised against the petitioner pertains to the year 2021-22."

"Cancellation of the registration does not prevent the petitioner from discharging his tax liability and from the statement of tax present in the writ application itself, it would appear that petitioner has discharged its liability partially."

"The petitioner, if willing to discharge its liability, is free to deposit the amount with the Department in accordance with law and if the deposits are offered by the petitioner, the Department shall accept the same towards the discharge of the liability of the petitioner."

"By filing the present writ application, the petitioner is, in fact, seeking appeal/review the order of this Court passed on 08.07.2024 in C.W.J.C. No. 10212 of 2024 where under the cancellation of the registration of the petitioner is upheld."

The Court established the core principle that statutory tax liabilities must be discharged irrespective of registration status and that administrative circulars granting relief are strictly limited to their stated periods and cannot be extended by analogy.

Furthermore, the judgment underscores the principle that writ petitions cannot be used as a substitute for appeals or reviews of earlier judicial orders, especially when the same issues have been conclusively adjudicated.

In conclusion, the Court disposed of the writ petition with the direction that the petitioner is free to pay the outstanding taxes along with applicable interest and penalty, and the Department must accept such payments in accordance with law.