E. Dharmaraj vs Assistant Commissioner of State Tax

Can Assessee be punished for mistake of their accountant? Can Assesses GST Registration be cancelled because Accountant filed NIL Return? The question was before Madras High Court where Department followed the law but assessee’s accountant did a mistake.

Interesting case The accountant, without taking instructions from the assessee, filed “NIL” return on the presumption that assessee had not commenced the business, proper officer cancelled the registration and said accountant filed GSTR-10 (Final Return) and completed cancellation formalities. The accountant, without taking steps to restore the cancelled GSTIN, accountant had filed GSTR-10 and accepted cancellation.

HELD: It appeared that petitioner had only made genuine transactions, and an error had been committed only on the part of the accountant who had filed GSTR-10 returns after knowing about the cancellation of GSTIN registration of assessee. Hence, the impugned order was liable to be set aside, and GSTIN registration was to be restored.

1.This Writ Petition has been filed challenging the impugned order of cancellation of GSTIN passed by the respondent dated 03.02.2023.

2.Ms.S.Akila, learned counsel appearing for the petitioner would submit that the petitioner is an illiterate and working as a owner-cum driver of lorry since the age of 25 years. The petitioner has obtained GST Registration No.33AQRPD0201D1ZO in the month of May 2018 in the trade name of M/s.Selvi Transport. For the purpose of filing GST returns, the petitioner has engaged the services of an auditor and has provided him with all the login credentials pertaining to GST portal.

3.While so, when the petitioner’s business is covered under Goods Transport Agency for which the liability for paying GST is on the service recipient under Reverse Charge Mechanism, the auditor engaged by the petitioner has been continuously filing NIL GSTR-1 and GSTR-3B returns instead of showing the actual outwards supplies. Therefore, on the presumption that the petitioner has not commenced any business, the respondent had cancelled the GST registration of the petitioner vide the impugned order dated 03.02.2023.

4.Though the petitioner had been successfully carrying on his transport business and raised an invoice to the tune of Rs.25,03,905/- during the period between June 2023 and October 2023, the said payment has been kept on hold by the client for want of active GSTIN. Only thereafter, it came to the knowledge of the petitioner that the GST registration has been cancelled by virtue of the impugned order dated 03.02.2023. Unless otherwise GST registration is restored, the petitioner is in no position to recover the invoice amount and hence, the petitioner has prayed for setting as the impugned order.

5.Per contra, Ms.E.Ranganayaki, learned Additional Government Pleader appearing on behalf of the respondent would submit that though the revocation of the GST registration was made in the month of February 2023, the petitioner has raised invoices to the tune of Rs.25,03,905/- during the period between June 2023 and October 2023. She would further submit the petitioner had been filing NIL returns continuously and pursuant to the same, when the GSTIN registration was cancelled by the respondent, the petitioner had also filed GSTR-10 and the same has also been accepted by the department. Hence, learned Additional Government Pleader prayed for dismissal of the writ petition.

6.I have duly considered the submissions made by the learned counsel appearing on behalf of the petitioner and the learned Additional Government Pleader appearing on behalf of the respondent/department.

7.Upon perusal of the documents, it is crystal clear that the GSTIN registration of the petitioner came to be cancelled by virtue of the impugned order. Further, it is an admitted fact that the petitioner is working as a owner-cum-driver of lorry since the age of 25 years and has petitioner has not commenced any business, the respondent had cancelled the GST registration of the petitioner. However, without taking steps to restore the cancelled GSTIN, the auditor has filed GSTR-10 and accepted the cancellation.

8.According to the learned Additional Government Pleader appearing on behalf of the respondent, the petitioner having accepted the cancellation by filing GSTR-10 returns, the petitioner was not supposed to have raised invoices for the period between June 2023 to October 2023. It is a common knowledge that no prudent man would have raised invoices after accepting the cancellation by filing GSTR-10 returns. In the instant case on hand, the reason assigned by the petitioner appears to be genuine. Though the petitioner has given proper instructions to the auditor, the auditor has filed NIL GSTR-1 and GSTR-3B returns and has also filed GSTR-10 returns after knowing about the cancellation of GSTIN registration standing in the name of the petitioner.

9.Therefore, for all these reasons, this Court is of the considered view that looking at any aspect it appears that the petitioner had only made genuine transactions and the error had been committed only on the part of the auditor who had filed GSTR-10 returns after knowing about the cancellation of GSTIN registration of the petitioner. Hence, the impugned order is liable to the set aside and the GSTIN registration No.33AQRPD0201D1ZO standing in the name of M/s.Selvi Transport is directed to be restored.

10.At this juncture, it is submitted by the learned Additional Government Pleader appearing on behalf of the respondent that the petitioner has to file a formal application for restoration of GSTIN registration No.33AQRPD0201D1ZO.

11.Considering the submission made by the learned Additional Government Pleader, the petitioner is directed to file an application for restoration of GSTIN registration within a period of one week from the date of receipt of a copy of this order and the respondent shall revoke the cancellation of GSTIN registration No.33AQRPD0201D1ZO within a period of two weeks thereafter.

12.The Writ Petition is disposed of accordingly. No costs. For reporting compliance, list the matter on 21.12.2023.

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E. Dharmaraj

For Reference Visit:
Madras High Court

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GST Case Law