2022 (12) TMI 1293 - HC - GST

Cancellation of registration of petitioner - non filing of returns for a period of six months - It is the case of the petitioner that the petitioner had filed returns for the defaulted period but did not file any appeal under Section 107 against Ext.P3 order of cancellation - HELD THAT - This writ petition is liable to be allowed. The show cause notice issued to the petitioner in this case is produced as Ext.P2. A perusal of Ext.P2 shows that the same has been issued in Form GST Reg 31. The said form is one for suspension of revocation and not for cancellation of registration. The notice is absolutely vague and it is not clearly specified with any clarity the reasons for proposing cancellation even the period for which there was alleged failure to file returns is not specified. The quashing of the impugned order of cancellation will not have the effect of absolving the petitioner of any fiscal liability. The petitioner will be required to file all defaulted returns together with tax late fee interest penalty etc. within a period of two weeks from the date on which the registration of the petitioner is restored in compliance with this judgment - Petition allowed.

Summary

Issues:
1. Cancellation of registration under CGST / SGST Acts for non-filing of returns.
2. Validity of show cause notice and procedural compliance.
3. Interpretation of relevant legal provisions and precedents.
4. Jurisdictional aspects and adherence to prescribed forms.

Analysis:
1. The petitioner challenged the cancellation of registration under the CGST / SGST Acts due to non-filing of returns for six months. The petitioner claimed to have filed the returns but did not appeal against the cancellation order or apply for revocation within the specified time limit under Section 30 of the Acts.

2. The petitioner's counsel cited judgments from the Madras and Gujarat High Courts, emphasizing the need for proper show cause notices and hearings before cancellation. The show cause notice issued to the petitioner was found to be vague and lacking clarity on reasons for cancellation and the specific period of non-compliance. The court held that the notice issued in Form GST REG-31 for suspension of registration did not comply with the requirements of Rule 21 of the CGST Rules.

3. The court referred to legal principles emphasizing that actions must be taken in accordance with prescribed procedures. It highlighted the importance of issuing notices in the correct form, as specified by law, to ensure procedural fairness. The court rejected the argument that strict interpretation in favor of revenue applies in this context, citing relevant Supreme Court decisions on interpreting fiscal legislation and exemptions.

4. Based on the analysis, the court allowed the writ petition, quashing the cancellation order. The court directed the petitioner to fulfill all fiscal obligations, including filing defaulted returns with applicable fees and penalties within two weeks of registration restoration. The judgment clarified that the cancellation order's annulment does not absolve the petitioner of any fiscal liabilities, maintaining the importance of compliance with tax laws.

This detailed analysis of the judgment from the Kerala High Court provides insights into the legal issues surrounding the cancellation of registration under the CGST / SGST Acts, procedural irregularities in issuing show cause notices, adherence to prescribed forms, and the interpretation of relevant legal provisions and precedents.