2020 (9) TMI 1201 - HC - GST

Cancellation of registration of petitioner - case of petitioner is that the petitioner had never sought for cancellation of the registration and that the cancellation in fact was sought by another establishment namely Omkar Steel - HELD THAT - The admitted factual position is that the petitioner was a duly registered body under the GST law. On account of inadvertence on the part of the Consultant of the petitioner, the application for cancellation of registration was put up by the Consultant in the name of the petitioner whereas the said application was in fact intended on behalf of another establishment namely M/s Omkar Steel. Thereafter, the petitioner had approached the respondents for revocation of the cancellation of registration which for want of proper provisions under the Act as also under the Rules has not been acceded or accepted by the Department. In the absence of any power so conferred upon the authorities in respect of the category whose cancellation has been done on an application filed by the registered person themselves, it will be difficult for this Court for issuance of a specific writ to consider the application for revocation of the cancellation of registration. Though in the opinion of this Court, once under Section 30 of the Act a power has been given to the proper officer for revocation of the cancellation of registration in respect of those establishments where the cancellation has been done at the instance of the Department, hence there is no reason why the other category where the registration has been cancelled at the behest of the registered person also not get an opportunity for moving before the authorities seeking for a revocation of the cancellation of registration if they so want. Rather, it should be a case where the said provision should be read in a manner where such category of persons also would have the liberty of approaching the authorities seeking for revocation of the cancellation of registration. This Court directs the petitioner to approach the GST Council in respect of their grievance and the stand taken by the Department. At the same time, this Court would also like to direct the respondents to consider referring the dispute of the petitioner to the GST Council for an appropriate clarification or guideline. Petition disposed off.

Issues Involved:
1. Cancellation of GST registration due to inadvertent error.
2. Compliance with Section 29 and Rule 22 of the GST Act and Rules.
3. Power of authorities to revoke cancellation under Section 30 of the GST Act.
4. Direction to approach GST Council for resolution.

Issue-Wise Detailed Analysis:

1. Cancellation of GST Registration Due to Inadvertent Error:
The primary grievance of the petitioner was the cancellation of their GST registration due to an inadvertent error by their Consultant, who mistakenly applied for cancellation in the petitioner's name instead of another dealer, M/s Omkar Steel. The petitioner never instructed the Consultant to make such an application. Despite efforts to rectify the error, the respondents refused to revoke the cancellation, leading to the filing of the writ petition.

2. Compliance with Section 29 and Rule 22 of the GST Act and Rules:
The petitioner argued that the respondents did not comply with Section 29 of the GST Act and Rule 22 of the Central GST Rules before canceling the registration. Section 29 empowers the proper officer to cancel registration either on their own motion or on an application by the registered person. Rule 22 mandates issuing a notice to the concerned person before canceling registration. The petitioner contended that the respondents failed to issue the required notice, making the cancellation unlawful.

3. Power of Authorities to Revoke Cancellation Under Section 30 of the GST Act:
The Department argued that under Section 30 of the GST Act, the proper officer could only revoke cancellation if it was done on their own motion, not if the cancellation was requested by the registered person themselves. The Department maintained that they lacked the jurisdiction to revoke cancellations made at the request of the registered person, as per the Act and Rules.

4. Direction to Approach GST Council for Resolution:
The Court noted that the GST Act is relatively new and implemented on a trial and error basis. Given the circumstances and the absence of explicit provisions for revoking cancellations requested by registered persons, the Court directed the petitioner to approach the GST Council for resolution. The Court also directed the respondents to consider referring the dispute to the GST Council for appropriate clarification or guidelines. Additionally, the Court highlighted the inconsistency in issuing notices under Rule 22, as M/s Omkar Steel received a notice before their cancellation, while the petitioner did not.

Conclusion:
The Court disposed of the writ petition with directions for the petitioner to approach the GST Council and for the respondents to consider referring the issue to the GST Council for clarification. The respondents were also directed to consider why the petitioner was not issued a notice under Rule 22, unlike M/s Omkar Steel. The Court emphasized the need for a decision from the GST Council to address similar situations in the future.

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