2022 (4) TMI 751 - HC - GST

Revocation of cancellation of registration of applicant - non-filing of returns by the writ-applicants - extension of time limitation or not - HELD THAT - The Central Board of Indirect Taxes and Customs extended the time limit for filing application for revocation of cancellation of registration and the limitation for all the orders passed on or before 12.06.2020 was to effectively commence from 31.08.2020. As the application filed by the writ-applicants for revocation of cancellation of registration was looked into by a quasi-judicial authority, the order of the Supreme Court extending the period of limitation in view of the Covid-19 Pandemic would apply and in such circumstances, the limitation in accordance with the order passed by the Central Board of Indirect Taxes and Customs could be said to have been extended. Indisputably, the application requesting for restoration of registration was filed in July 2021 i.e. during the period when the order of the Supreme Court extending the limitation was in operation. More importantly, the writ-applicants have paid the requisite amount towards tax on the basis of self assessed liability on 06.09.2021. Since the registration of certificate of the writ-applicants came to be cancelled solely on the ground of non-filing of the returns, which was on account of non-payment of tax and the writ-applicants now having paid such outstanding tax, the registration certificate of the writ-applicants should be ordered to be restored so that they are able to continue with their business. The impugned order dated 10.07.2019 cancelling the registration certificate is hereby quashed and set aside. The respondents are directed to forthwith restore the registration certificate of the writ-applicants under the provisions of the G.S.T. Act - Application disposed off.

Summary

Issues:
1. Application for cancellation of registration certificate under GST Acts.
2. Time limit for filing application for revocation of cancellation.
3. Impact of Covid-19 pandemic on limitation period.
4. Grounds for cancellation of registration certificate.
5. Entitlement to seek relief for restoration of registration certificate.

Issue 1: Application for cancellation of registration certificate under GST Acts:
The writ-applicants, engaged in trading iron and steel scrap, were registered under the GST Acts. Financial difficulties led to non-filing of returns in 2019, resulting in a show cause notice proposing cancellation of their registration certificate. Despite explaining their financial constraints, the registration certificate was canceled on 10.7.2019 by the 3rd respondent authority, citing non-compliance as the reason. The writ-applicants were not physically served the cancellation order but were informed by their consultant about the necessity to file returns only after paying tax dues.

Issue 2: Time limit for filing application for revocation of cancellation:
The writ-applicants filed for restoration in July 2021 after managing to pay the tax dues on 06.09.2021. The appellate authority dismissed their request as time-barred by limitation. However, the Central Board of Indirect Taxes extended the time limit for such applications, and the Supreme Court's orders during the Covid-19 pandemic further extended the limitation period. The writ-applicants argued that their application was within the extended limitation period and should be considered valid.

Issue 3: Impact of Covid-19 pandemic on limitation period:
The writ-applicants contended that the orders of the Honorable Supreme Court extending limitation due to the pandemic applied to their case, as they filed for restoration during the period covered by the extension. They emphasized that the cancellation of their registration was solely due to non-payment of tax resulting from financial constraints, which they rectified by paying the outstanding tax amount.

Issue 4: Grounds for cancellation of registration certificate:
The cancellation of the registration certificate was based on the non-filing of returns due to financial difficulties beyond the control of the writ-applicants. Once they paid the outstanding tax, the reason for cancellation was resolved, and they sought restoration to resume their business activities.

Issue 5: Entitlement to seek relief for restoration of registration certificate:
After considering the arguments from both sides, the Court found that the writ-applicants were entitled to relief. The cancellation of the registration certificate was quashed and set aside, with a direction for immediate restoration by the respondents under the provisions of the GST Act. The Court acknowledged the writ-applicants' efforts to rectify the situation and permitted them to continue their business activities.

In conclusion, the High Court of Gujarat allowed the writ-application, quashing the cancellation of the registration certificate and ordering its restoration based on the writ-applicants' compliance with tax obligations and the extended limitation period due to the Covid-19 pandemic.