2020 (10) TMI 1296 - Commissioner - GST

Cancellation of registration of petitioner - non filing of statuary returns for three consecutive tax periods - continuous period of six months under clause (b) or clause (c) of sub-section (2) of section 29 of the CGST Act 2017 - non-speaking order - whether or not the appeal filed against the order of cancellation to be decided are proper? - HELD THAT - In the instant cases the appeal has been filed by delay from the normal period prescribed under Section 107(1) of the CGST Act 2017. Though the delay in filing the appeal is condonable only for a further period of one month provided that the appellant was prevented by sufficient cause from presenting the appeal is shown and the delay of more than one month is not condonable under the provisions of sub section (4) of Section 107 of the Central Goods and Service Tax Act 2017. The appellant had not responded to the Notice to return defaulter issued u/s 46 for not filing return in form GSTR-3A dated 02.01.2020 and show cause notice dated 04.02.2020 issued for cancellation of registration nor filed pending returns by the proper officer - where a registered person fails to furnish the returns u/s 39 or 45 of the Act even after the service of Notice u/s 46 the proper officer is required to pass an order assessing the tax liability of the said person to the best of his judgment taking into account all the relevant material which is available or which he has gathered within a period of five years from the date of filing annual return for the financial year to which the tax not paid relates. The contention made in the grounds of appeal of the appellant is tenable and the order dated 21.07.2020 determining the liability of the appellant is not legally correct and proper. The appellant has filed returns upto date of cancellation of registration hence I find that the appellant has substantially complied with the above said provisions of the CGST Act/Rules 2017 in the instant case. At this stage the appellate authority is in no position to decide the issue on merit on the basis of available records presented by the appellant. The proper officer/adjudicating authority is required to examine the issue afresh on the available records in the matter and ascertain the tax liability of the appellant. The proper officer is directed to consider the revocation application of the appellant after due verification of payment particulars of tax late fee interest penalty status of returns and recover Govt. dues if any arise from the appellant in terms of provisions of the CGST Act 2017 and rules made thereunder - the registration of appellant may be considered for revocation by the proper officer - appeal allowed.

Summary

Issues Involved:
1. Timeliness of the appeal filing.
2. Validity of the cancellation order and determination of tax liability.

Detailed Analysis:

1. Timeliness of the Appeal Filing:
The appellant filed the appeal under Section 107(1) of the CGST Act, 2017, with a delay of 10 months and 11 days. The statutory provisions under Section 107(1) and (4) of the Act allow for an appeal to be filed within three months, with a possible extension of one month if the appellant shows sufficient cause. The delay beyond this period is non-condonable as per the Act.

However, the Hon'ble Supreme Court, in Suo Motu Writ Petition (Civil) No.3 of 2020, extended the limitation period due to the COVID-19 pandemic. The period from 15.03.2020 to 02.10.2021 was excluded from the limitation period. Consequently, the appellant's delay was condoned based on this extension, allowing the case to be decided on its merits.

2. Validity of the Cancellation Order and Determination of Tax Liability:
The Proper Officer issued a show cause notice (SCN) on 04.02.2020 for non-filing of returns for six consecutive months, leading to the cancellation of the appellant's GST registration on 21.07.2020 and determination of a tax liability of ?79,720/- CGST and ?79,720/- interest.

The appellant contested the demand on several grounds:
- The tax payable was calculated incorrectly.
- The demand was assessed in the cancellation order without following the procedure under Section 62 of the CGST Act.
- The demand was arbitrary and not based on any business activity during the period.
- The order was not a speaking order and lacked reasoning.
- The appellant's business was affected by COVID-19, preventing timely filing of returns.

The adjudicating authority determined the tax liability based on the average tax payment from April 2018 to March 2019. However, the appellant argued that no business was conducted during the period in question, and the assessment should have followed the provisions under Section 62 and Rule 100 of the CGST Rules, 2017.

Legal Provisions and Observations:
- Section 39 mandates the filing of returns and payment of tax by the due date. The appellant failed to comply, leading to the issuance of the SCN and subsequent cancellation of registration.
- Section 62 provides for the assessment of non-filers of returns. The proper officer should issue an assessment order in Form GST ASMT-13 and upload a summary in Form GST DRC-07. This procedure was not followed in the appellant's case, making the tax liability determination adhoc and incorrect.
- Rule 23 allows for the revocation of cancellation if the appellant furnishes all pending returns and pays the due tax, interest, penalty, and late fee.

The appellant filed all pending returns by 09.07.2021 and expressed willingness to comply with all government dues. The adjudicating authority's determination of tax liability without following the proper assessment procedure under Section 62 was found to be incorrect.

Conclusion:
The appeal was allowed, and the adjudicating authority was directed to consider the revocation of the appellant's GST registration. The proper officer was instructed to verify the payment particulars, status of returns, and recover any government dues. The appellant was directed to cooperate with the department during verification. The appeal was disposed of accordingly.