Accountant fails to Submit GST Returns for 6 Months: Madras HC orders GSTN to take Necessary Actions for filing Returns [Read Order]

The Madurai Bench of Madras High Court has directed the Goods and Services Tax Network ( GSTN ) to take necessary technical steps to enable a taxpayer to file pending returns after noting that the default occurred due to failure of the engaged accountant to file GSTreturns for six consecutive months.

In the matter of Tvl. KRM Construction where the petitioner challenged the cancellation of its GST registration ordered on 1 July 2024 for continuous non-filing of returns.

The petitioner claimed that due to severe health problems, a part-time accountant was given responsibility for statutory compliance, including filing GST returns. The accountant neglected to fulfill his responsibilities, which led to non-filing of the returns and eventually the cancellation of registration.

Justice Krishnan Ramasamy observed that the explanation offered by the petitioner appeared to be genuine and bona fide.

The Court took note of the fact that the taxpayer had expressed willingness to file all pending returns and discharge the entire tax liability along with applicable interest, late fee, and penalty, if permitted to do so.

Accordingly, it held that the extreme consequence of cancellation of registration was not required in the facts of the case.

The High Court revoked the cancellation of GST registration, subject to strict compliance conditions. The Court directed the tax authorities to instruct GSTN, New Delhi, to make suitable changes in the GST portal architecture so as to enable the petitioner to file pending returns and make payment of dues within a stipulated period of four weeks.

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The Court further directed the petitioner to file all pending returns and clear tax dues along with interest and late fee within four weeks from restoration of registration. It also clarified that no tax, interest, or penalty could be paid or adjusted using unutilised or unclaimed Input Tax Credit (ITC). Any ITC lying in the electronic credit ledger was directed to remain blocked until it is scrutinised and expressly approved by the competent authority.

Additionally, the High Court issued warned that failure to comply with any of the requirements would automatically terminate the relief granted and reinstate the penalties of cancellation. The writ petition was dismissed with these instructions.

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