GST Cancellation Over Non-Filing of Returns Set Aside: Madras HC Grants Opportunity to Clear Dues Barring Adjustment from Unutilised ITC [Read Order]

The Madras High Court has set aside the suo motu cancellation of a taxpayer’s GST ( Goods and Services Tax) registration on the ground of non-filing of returns for over six months, granting the petitioner an opportunity to regularise compliance subject to specific conditions.

The writ petition challenged the cancellation of GST Registration under Section 29(2) of the Central Goods and Services Tax Act and also sought a direction to the department to ensure recovery of GST dues from a third party.

Considering the matter for final disposal at the admission stage itself, the Court noted that the issue was squarely covered by its earlier rulings, particularly the landmark judgment in Tvl. Suguna Cutpiece Center vs. Appellate Deputy Commissioner (ST) (GST), wherein similar cancellations were quashed subject to fulfillment of tax obligations.

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Following that precedent, Justice Krishnan Ramasamy directed the petitioner to file all pending returns for the period prior to cancellation and pay applicable taxes, interest, fines, and late fees within 45 days.

The Court barred the use of unutilised ITC for such payments, mandating that dues be cleared in cash. Any unutilised ITC can only be applied after departmental scrutiny and approval.

Additionally, the Court instructed the GST Department to enable the necessary technical access for the petitioner on the GSTN portal to facilitate return filing and payment. However, the Court declined the petitioner’s prayer seeking enforcement of GST payments allegedly due from a third party, stating that it is for the department to initiate separate proceedings if necessary.

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