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23 June 2021

Revocation of cancellation of registration can't be denied for the reason that the assessee has incorrectly availed ITC

Recently, Hon’ble High Court of Madras, in the matter of Prateeksha Bharat Gas Gramia vs. State Tax Officer, Katagiri, W.P No. 15081 of 2020, held that revocation of cancellation of registration can’t be denied for the reason that the assessee has incorrectly availed the ITC.

The petitioner was holding GST Registration Certificate issued on 02.08.2018, effective 01.07.2017. A show cause notice was issued by the first respondent assessing officer on 22.07.2019 calling upon the petitioner to show cause why the registration is not cancelled, since the petitioner had not filed returns for a continuous period of six months. The non-filing of the returns is admitted. Thereafter, the registration came to be cancelled on 16.09.2019, which is also challenged by way of the present writ petition.

As against the order of cancellation, two applications have been filed by the petitioner under Section 30, the first one rejected by an order dated 24.07.2020 referring to non-compliance of the petitioner to notice issued by the assessing officer, and the second dated 09.09.2020, rejected on 12.09.2020, referring to outstanding interest on belated payment of tax dues and for allegedly wrongful claim of ITC.

As against order for cancellation of registration, the petitioner filed an appeal before R2 (Deputy Commissioner, ST), who has issued the deficiency memo, challenged in this writ petition.

It was find out in the said case by the Hon’ble Madras High Court that the contention of the respondents herein that the conditional upon the petitioner satisfying tax dues and substantiating its claim of ITC, is misconceived. What is sought for by the petitioner is revocation/revival of registration only, and in the guise of considering the application for revocation, the authorities cannot embark upon the process of assessment.

The Court held that an assessment would have to be made by the authority in terms of Section 73 or other applicable provision after following the procedure set out therein, and it is only in the course thereof that the officer may consider and decide questions of leviability of tax and claim of input tax credit.

The court further held that registration will not be revived since the petitioner has incorrectly availed of ITC would be putting the cart before the horse. In fact, it is seen that the petitioner has filed monthly returns as well as annual returns for the periods January 2017-18 to September 2019-20 and for financial years 2017-18 and 2018-19 and has also remitted late fee for filing of belated returns. Thus, and these being the only conditions that are to be satisfied by the petitioner for grant of revocation of registration, I am of the view that the cancellation of the registration in this case is incorrect and improper.