2021 (11) TMI 289 - Commissioner - GST

Cancellation of GST registration of petitioner - Section 29(3) of CGST Act, 2017 - HELD THAT - From the facts available on the records it is quite clear that the appellant has applied for cancellation of registration on 17-12-2018. Thus, as per the first proviso of Section 29 of CGST Act, 2017 read with Rule 21A of CGST Rules, 2017 the registration of appellant was deemed to be suspended till the pending the completion of proceeding of cancellation of registration under Rule 22 of CGST Rules, 2017. Further, it is observed that the process of cancellation of registration was pending since long time and thereafter show cause notice was issued to the appellant vide reference Number ZA081120018826S, dated 7-11-2020 wherein additional information/clarification/documents relating to application for cancellation was asked and also it was directed in the said show cause notice to file the GST Return. The proper officer has rejected the application for cancellation of registration of the appellant vide REG-05 ZA0812200C0253F, dated 1-12-2020 on the ground that response not received whereas, it is found that the proper officer has not commented upon the appellant contention that he was appeared on due date before proper officer and submitted his reply - the proper officer should have taken contention of appellant on record before rejection of application of cancellation of registration but he did not do so and also he did not explain properly the same on comments offered on appeal memo sought by this office. The appellant was not able to file returns as his registration was deemed to be suspended - as per Section 29(3) of CGST Act, 2017 in the event of cancellation of registration the liability of the person to pay tax and other dues or to discharge any obligation under the Act or rules are made thereunder shall not affect for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation. The effective date of cancellation of registration of appellant may be considered from 17-12-2018 by the proper officer - the proper officer is ordered to consider the application of cancellation of registration from the date of first time apply i.e. 17-12-2018 by the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Rejection of application for cancellation of GST registration.
2. Liability to file GST returns and pay taxes during the period of suspension.
3. Effective date of cancellation of GST registration.

Detailed Analysis:

1. Rejection of Application for Cancellation of GST Registration:
The appellant, Miss Vandana Sharma (M/s. Anita Mukund Enterprises), applied for cancellation of GST registration on 17-12-2018, citing that the firm's turnover did not cross the threshold limit. Despite submitting all necessary GST returns up to December 2018, the application was processed after two years and rejected due to "response not received." The appellant contended that they had responded to the notice issued by the department on 20-11-2019. The adjudicating authority failed to consider the appellant's contention and did not provide a proper explanation for the rejection.

2. Liability to File GST Returns and Pay Taxes During the Period of Suspension:
The appellant argued that once the cancellation application was filed, they could neither issue tax invoices nor file GST returns, as the registration was deemed suspended. The proper officer rejected the subsequent application for cancellation on 19-1-2021, stating that the taxpayer had not filed pending GST returns and had not paid taxes. However, the appellant maintained that filing returns during the suspension period was not feasible and would contradict their Income Tax Return. The adjudicating authority agreed that the appellant could not file returns or issue invoices during the suspension period, making the rejection order improper and incorrect.

3. Effective Date of Cancellation of GST Registration:
The appellant requested that the effective date of cancellation be considered from the date of the first application, i.e., 17-12-2018. The adjudicating authority noted that the application for cancellation was indeed submitted on 17-12-2018, and the registration was deemed suspended from that date. The proper officer was instructed to consider the effective date of cancellation from 17-12-2018, as per the appellant's initial application.

Conclusion:
The appeal was allowed, and the proper officer was ordered to consider the effective date of cancellation of registration from 17-12-2018. The appellant's liability to pay tax and other dues for any period prior to the date of cancellation remains unaffected. The appeal was disposed of accordingly.