2020 (4) TMI 176 - HC - GST

Best judgment assessment u/s 62 - failure of file the GST returns - Automatic suspension of registration - Request for Cancellation of registration of dealer for filed u/s 29 - discontinuance of the business - HELD THAT - The writ petition is liable to be dismissed solely on the ground of nondisclosure of the issuance of show cause notice dated 14.5.2019 which is conveniently omitted from the pleadings. Be that as it may, no explanation is forthcoming and in how and what manner the petitioner refrained himself from relying on the issuance of show cause notice. No doubt, under sub-rule (3) of Rule 22, the person who applies for a cancellation of the registration, the authorities concerned is required to pass an order in Form GST REG-19 within a period of 30 days from the date of receipt of the application. There could have been a force in the arguments, had there been no show cause notice on behalf of the Revenue. Regarding the application of the provisions of Section 62 pertaining to assessment of non-filing of the returns once the portal remain active, petitioner even if had not conducted any business, has to file the return. The returns are filed in April 2019 and not thereafter. Submission of the fresh application and cancellation is perhaps on a premise that the petitioner could not overcome the rigors of the provisions of the Act, particularly provisions of Section 62. There are no scope for interference is warranted under Article 226 of the Constitution of India, when the petitioner has a remedy of appeal as provided under the Act - petition dismissed.

Summary

Issues:
1. Validity of assessment orders and demand notice under GST Act.
2. Interpretation of Section 62 of the Central Goods and Service Tax Act, 2017.
3. Compliance with Rule 21 and Rule 22 of the Central Goods and Service Tax Rules, 2017.
4. Allegations of non-disclosure and intentional withholding of information by the petitioner.
5. Consideration of show cause notice and its impact on the case.
6. Implications of filing nil returns and the necessity of responding to notices.
7. Applicability of Section 62 regarding non-filing of returns.

Analysis:

1. The petitioner sought a writ of certiorari to quash assessment orders and a demand notice under the GST Act, claiming to be a registered dealer engaged in trading plywood but facing losses. The petitioner applied for registration cancellation, ceased business, and filed nil returns. The Assessing Officer was informed of the business discontinuation.

2. The petitioner argued that Section 62 of the GST Act should apply, suspending registration during cancellation proceedings. Reference was made to Rule 21 empowering registration cancellation for non-business conduct. The petitioner contended the assessment orders were unsustainable due to the pending cancellation request.

3. The Government Pleader alleged non-disclosure by the petitioner regarding a show cause notice, indicating continued activity till September 2019. A cancellation request in January 2020 was pending. The plea cited Rule 22(3) and sought dismissal of the writ petition.

4. The court found the petitioner's case lacking merit due to non-disclosure of the show cause notice. The petitioner's failure to respond to the notice and file returns despite an active portal resulted in penalties. The court highlighted the necessity to engage with official communications and follow prescribed procedures.

5. The court emphasized the importance of timely responses to official notices and compliance with statutory requirements. The petitioner's failure to address the show cause notice and file returns impacted the case negatively, leading to dismissal of the writ petition.

6. The court concluded that the petitioner's actions did not align with the provisions of the Act, specifically Section 62. The petitioner's failure to file returns post-April 2019 and subsequent cancellation request indicated an attempt to avoid statutory obligations, justifying the dismissal of the writ petition.

7. The court held that interference under Article 226 was unwarranted when the petitioner had the option to appeal under the Act. The writ petition was dismissed, emphasizing the importance of adherence to legal procedures and statutory requirements in tax matters.