Jap Modular Furniture Concepts PVT. LTD. vs. State Of Gujarat

Held

The Court allowed the writ application, finding the respondents' reply to be contradictory. The Court directed the respondents to unblock and activate the writ applicants' GST registration and grant the final registration certificate with effect from July 1, 2017. The respondents were also ordered to permit the writ applicants to upload returns and pay tax from July 1, 2017, onwards without levying any late fees for belated filing. Furthermore, the Court directed the respondents to allow the writ applicants to claim Input Tax Credit (ITC) for imports/purchases made during the period the GST registration was blocked or inactivated. The Court explicitly stated that no dispute regarding the time limit under Section 16(4) of the GST Act should be raised, as the inability to claim ITC was solely due to the blocking of registration by the respondents. The issue of the petitioner himself filing for cancellation was implicitly disregarded due to the contradictory nature of the respondents' submission.

Facts

The writ applicants, engaged in import and sale of furniture, were registered under the Gujarat Value Added Tax Act, 2003. They were granted provisional registration under the GST Act based on their VAT registration. However, their VAT registration was cancelled on June 15, 2017, due to a default by their Chartered Accountant. Consequently, their provisional GST registration was blocked, and final registration was not granted. The applicants successfully appealed the VAT cancellation, and their VAT registration was restored from the date of cancellation. Despite this, their GST registration remained blocked. They made several representations to the authorities for activation of their GST registration and to be allowed to file returns, pay tax, and claim Input Tax Credit (ITC) on imports made during the period of blocked registration. As no response was received, they filed this writ application.

Key Issues

1. Whether the respondents are obligated to activate the petitioners' GST registration and grant a final certificate from July 1, 2017, given that the basis for its blocking (VAT registration cancellation) has been removed by a favorable appellate order under the VAT Act. 2. Whether the respondents should permit the petitioners to file returns and pay tax under the GST Acts from July 1, 2017, and refrain from imposing late fees or penalties for non-filing/late filing due to the blocked registration. 3. Whether the respondents should allow the petitioners to claim Input Tax Credit (ITC) on IGST paid on imports made during the period their GST registration was blocked. Petitioner's arguments: The petitioners contended that since their VAT registration was restored, the reason for blocking their GST registration no longer existed. They argued that the authorities' inaction prevented them from fulfilling their GST obligations and claiming legitimate ITC. They sought activation of registration, permission to file returns and pay tax without penalty, and allowance to claim ITC. Revenue's arguments: The respondents, in their affidavit-in-reply, stated that the petitioners had GST registration in two states, Gujarat and Maharashtra. For Gujarat, the GST number was automatically cancelled due to VAT registration cancellation. Crucially, they also stated that the petitioner himself submitted Form GST REG-29 for cancellation of registration on August 23, 2017. The Court noted these averments were mutually destructive.