Tvl. Sastha Engineering Works vs. The State Tax Officer (Circle)

Held

The Court allowed the writ petition, extending the benefit granted in the case of Tvl. Suguna Cutpiece Vs The Appellate Deputy Commissioner (ST) (GST) and others. The Court directed the petitioner to file all pending returns for the period prior to the cancellation of registration, along with the defaulted tax, interest, and any applicable fine or fee, within forty-five days from the date of receipt of a copy of the order. It was clarified that these payments could not be made or adjusted from any unutilized Input Tax Credit (ITC). Any remaining ITC would be subject to scrutiny and approval by a competent officer before it could be utilized for future tax liabilities. The petitioner was also required to pay GST and file returns for the period subsequent to the cancellation, with payments to be made in cash. The Court further directed that upon payment of tax, penalty, and uploading of returns, the registration would stand revived forthwith. The respondents were instructed to take steps to enable the petitioner to file returns and pay taxes/penalties through the GST portal within thirty days. The Court noted that the Revenue/Department had accepted the view in similar matters by not filing appeals.

Facts

The petitioner, Tvl. Sastha Engineering Works, filed a writ petition challenging an order dated 30.11.2020 passed by the 1st respondent, the State Tax Officer, Karur. The petitioner's GST registration was cancelled because they failed to file GSTR 3B returns for more than six months. The petitioner explained that due to the pandemic, they did not receive payments from the District Rural Development Agency, making them unable to remit taxes and file returns. The petitioner subsequently filed an appeal before the 2nd respondent, the Deputy Commissioner (GST Appeal), Salem, but this was beyond the statutory time limit prescribed under Section 107 of the GST Act.

Key Issues

1. Whether the cancellation of GST registration for non-filing of returns for more than six months, particularly in light of the pandemic's impact on the petitioner's business and cash flow, is legally sustainable? (Question of law and fact, concerning the interpretation and application of provisions related to GST registration cancellation and the impact of external circumstances). Petitioner's contentions: The petitioner argued that their failure to file returns was due to circumstances beyond their control, specifically the non-receipt of payments from a government agency during the pandemic, which affected their ability to pay taxes. They relied on a batch of writ petitions, specifically Tvl. Suguna Cutpiece Vs The Appellate Deputy Commissioner (ST) (GST) and others, where similar directions were issued by this Court. They also pointed out that the Revenue/Department had accepted the view in similar matters by not filing appeals. Respondents' contentions: The judgment does not record any specific arguments made by the respondents.