Cancellation of GST Registration: Madras HC directs GST Department to De-Freeze Bank Account on Payment of First Instalment of Tax Portion [Read Order]

In a recent decision the Madras High Court directed the Goods and Service Tax (GST) Department to de-freeze bank account on payment of first instalment of tax portion in the matter of cancellation of GST registration.

The petitioner in the present matter is NS Rathinam and Sons. The writ petition was filed under Article 226 of the Constitution of India challenging the assessment order and the consequential imposition of penalty and interest.

The contention of the petitioner is that the petitioner is liable to pay the tax and the interest portion which have been quantified by the respondents. However, the respondents have issued orders to freeze the petitioner's bank account and also cancelled the GST registration. The Court was of the view that the case needs elaborate consideration.

The registration granted under GST can be cancelled for specified reasons. The cancellation can either be initiated by the department at its own motion or the registered person can apply for cancellation of their registration. In case of death of registered person, in case of proprietorship concern, the legal heirs can apply for cancellation.

In case the registration has been cancelled by the department there is a provision for revocation of the cancellation of registration at the request of the taxpayer. On cancellation of the registration the person has to file a return which is called the final return. The final return has to be filed within three months of cancellation of GST registration.

A Single Bench of Justice S Srimathy observed that “Therefore, the petitioner is directed to pay the entire tax portion in four equal instalments. As far as the interest portion is concerned, that will be considered after the payment of the tax liability.”

The Court further directed to pay the first instalment within a period of one week from the date of receipt of a copy of this order. On such payment the respondents are directed to de-freeze the petitioner's bank account. The respondents were also directed to file counter affidavit.

To Read the full text of the Order CLICK HERE

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