The Madras High Court set aside an order denying composition to a small dealer that had not filed ITC-03, and suggested it be allowed to pay compounded tax while the matter is reconsidered.
The Madras High Court has quashed an order denying the composition scheme under Section 10 and a consequential Section 74 notice, where the taxpayer had belatedly filed Form ITC-03 under Rule 3, and directed a fresh decision that takes the late compliance into account. [Naveen Sports Wears v. Superintendent of CGST and Central Excise & Ors., 2026-juristway.com-3166-HC(Madras)-GST]
Justice C. Saravanan disposed of the writ petition at the admission stage with the consent of both sides.
The petitioner, registered in 2018, moved from regular tax to the composition levy and filed CMP-08 and GSTR‑4 returns, but did not file ITC-03 with details of stock and credit reversal. After it failed to reply to a notice dated 5 Aug 2026, an order in Form GST CMP-07 dated 24 Aug 2026 denied it the composition benefit, and a Section 74 notice for 2020-21 to 2024-25 followed on 28 Aug 2026. The petitioner filed ITC-03 on 27 Sep 2026.
The Court observed that if the petitioner’s composition claim is accepted, the Section 74 proceedings “will be rendered nugatory.” As ITC-03 had been filed post facto, it quashed the impugned orders and directed the first respondent to pass a fresh order.
Noting from its returns that the petitioner is a tiny undertaking, the Court said the respondents may allow it to collect and pay tax under the compounded levy, without prejudice to their rights. The petitioner must reply to the notice that preceded the CMP-07 order within 30 days, and an order is to follow within three months of the reply.
2026-juristway.com-3166-HC(Madras)-GST
