2023 (2) TMI 1305 - HC - GST

Cancellation of GST registration of the petitioner - time limitation - period of limitation as prescribed under the Act had already elapsed for filing an application for revocation of the cancellation of GST registration under Section 30 as well as for an Appeal under Section 107 of the CGST Act, 2017 - non-service of personal notice - HELD THAT - The order for cancellation of GST registration of the petitioner was issued on 07.09.2021 It is apparent that the order for cancellation of GST registration was passed on 07.09.2021 and the application for revocation of cancellation was required to be filed within 30 (thirty) days therefrom as per the provisions of the CGST Act, 2017 - It is apparent that the authorities did not take into account the orders passed by the Apex Court regarding cognizance for extension of limitation and had accordingly failed to pass appropriate orders revoking the cancellation of GST registration. There is another aspect required to be noticed. If the petitioner is not included within the GST regime, then any statutory dues that may be required to be deposited by the petitioner may not be deposited and which will not be in the interest of the revenue. The reasons for default on the part of the petitioner to submit its periodical returns as required under GST Act and the Rules, as pleaded in the present proceedings, are attributed to the financial losses suffered by the petitioner because of the COVID-19 Pandemic situation. The purpose of limitation being prescribed in a statute is two fold, namely, to ensure compliance of the statutory provisions by the persons on whom the provisions of the statute are applicable and further to ensure that no third party rights which may have been created in the meantime are permitted to be nonsuited/ unsettled. Under the scheme of GST Act and Rules, the non-revocation of cancellation of GST registration is likely to prejudice the assessee alone. In cancellation of such GST registration for the reasons mentioned under the Section, it cannot be said that any third party rights are created against the assessee. The matter is remanded back to the departmental authority to reconsider his prayer for revocation of cancellation of GST registration - impugned order is set aside - petition disposed off by way of remand.

Summary

Issues involved: Impugning the cancellation of GST registration u/s 29 of the Central Goods and Services Tax Act, 2017 without proper notice to the petitioner.

Summary:
The petitioner, engaged in works contracts with the Public Works Departments, had their GST registration cancelled without prior notice. The cancellation was based on a notice issued under Section 29 (2) of the CGST Act, 2017, which was uploaded on the department's website without personal service. This lack of notice violated natural justice principles and the GST Act. The petitioner's livelihood was affected due to the cancellation, hindering their business activities.

The petitioner, upon discovering the suspension and subsequent cancellation of GST registration, found the time limit for filing appeals had lapsed due to the lack of personal notice. With no alternative remedy available, the petitioner filed a writ petition seeking relief. The petitioner had already paid the statutory dues, emphasizing compliance with obligations.

The High Court noted that the Apex Court had extended the limitation period due to the COVID-19 pandemic, which encompassed the dates relevant to the petitioner's case. The authorities failed to consider this extension, leading to the cancellation of GST registration without due process. Reinstating the registration was crucial for the petitioner to fulfill tax obligations and benefit the revenue.

Rule 23(1) of the GST Rules of 2017 mandates filing for revocation only after fulfilling tax obligations. The petitioner's default in submitting returns was attributed to financial losses from the pandemic. The purpose of limitation in statutes is to ensure compliance and protect third-party rights. Revoking the cancellation of GST registration would benefit revenue collection and not prejudice any party.

The High Court set aside the order of cancellation and remanded the matter to the department for reconsideration. The respondent authority was directed to inform the petitioner of outstanding dues, which upon payment would lead to the revocation of the GST registration cancellation. The petitioner was instructed to continue periodic payment of statutory dues as per the CGST Act, 2017. The writ petition was disposed of with no costs incurred.