Ravichandran.V vs. The State Tax Officer

Held

The Court held that the cancellation of GST registration for continuous filing of Nil returns, despite the petitioner's explanation for the delay and subsequent belated filing of returns, was unsustainable. The Court followed the principle laid down in Tvl. Suguna Cutpiece vs. Appellate Deputy Commissioner (ST) and others, emphasizing that the GST enactments are intended to facilitate trade and commerce rather than debar assessees. The Court reasoned that denying registration would not only prevent legitimate trade but also defeat the object of levying and collecting tax. The Court found that the petitioner deserved a chance to revive their registration to regularize defaults, and the authorities could impose penalties to deter future lapses. The Court directed the revival of the petitioner's GST registration subject to specific conditions, including filing pending returns, paying tax, interest, and penalties within 45 days, with payments not to be adjusted from Input Tax Credit (ITC) unless scrutinized and approved. The respondent was also directed to take steps to enable the petitioner to file returns and pay dues on the GST portal within 30 days.

Facts

The petitioner, V. Ravichandran, proprietor of Tvl. Dinesh Udhay Agencies, engaged in the business of cement and steel, filed Nil returns due to a lack of business transactions. The respondent, The Assistant Commissioner (ST), Theni-II (Aundipatti) Assessment Circle, cancelled the petitioner's GST registration on 24.08.2022, citing continuous filing of Nil returns. The petitioner attributed the delay in filing monthly returns to the proprietor's health issues and family commitments. Subsequently, returns up to August 2022 were filed belatedly on 19.09.2022. As the respondent was unwilling to restore the registration, the petitioner approached the High Court.

Key Issues

1. Whether the cancellation of GST registration for continuous filing of Nil returns, despite subsequent belated filing of returns and explanation for delay, is sustainable in law, particularly in light of the principle that GST enactments aim to facilitate trade rather than debar assessees? (Question of law turning on the interpretation of the intent and spirit of the GST regime and the powers under Article 226 of the Constitution). Petitioner's contention: The petitioner argued that keeping them out of the GST regime serves no useful purpose, as they would continue to do business. They relied on the decision in Tvl. Suguna Cutpiece vs. Appellate Deputy Commissioner (ST) and others, which held that assessees should be allowed to revive their registration to integrate them back into the mainstream, subject to safeguards. They also contended that denying registration infringes upon their constitutional rights to trade and profession under Article 19(1)(g). Respondent's contention: The respondent's counsel admitted that the judgment in Tvl. Suguna Cutpiece was being followed in similar matters.