2023 (3) TMI 567 - HC - GST

Cancellation of GST registration of petitioner - petitioner is aggrieved that there was no personal notice served upon the petitioner prior to suspension and cancellation of the GST registration rather a notice was simply uploaded in the website of the department - violation of principles of natural justice (non-issuance of SCN as well as audi alterem partem) - time limitation - HELD THAT - Under Rule 23(1) of the GST Rules of 2017 it is provided that no application for revocation shall be filed unless such returns are furnished and any amount due as tax in terms of such returns has been paid along with any amount payable towards interest, penalty and late fee in respect of the said returns. 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. It is the further case of the petitioner that against the order of cancellation of its GST registration, the petitioner had preferred an appeal before the Appellate Authority under Section 107 of the GST Act, 2017. 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. No prejudice is caused to any other person, if the GST registration of the petitioner/assessee is revoked. No prejudice is caused to the revenue. Rather as discussed above, it will be in the interest of the revenue to permit the revocation of a cancellation of GST registration of an assessee like the petitioner so that it felicitates collection of revenue as mandated under the GST Regime. A writ Court is empowered to condone the delay of any statutory or quasi judicial authority. Such power is inherent in a COMMISSIONER OF INCOME-TAX VERSUS PHEROZA FRAMROZE AND CO. 2017 (5) TMI 436 - SUPREME COURT . Accordingly, in view of the above discussions and on the facts and circumstances of this case, this Court is of the considered view that the appeal before the Appellate Authority should be re-heard on merits by passing appropriate orders regarding the revocation of cancellation of GST. This Court is of the considered view that the appeal before the Appellate Authority should be re-heard on merits by passing appropriate orders regarding the revocation of cancellation of GST. The impugned order dated 25.01.2023 dismissing the appeal is hereby set aside - petition disposed off.

Summary

Issues:
Challenge to cancellation of GST registration without notice, Appeal dismissal on grounds of limitation, Compliance with statutory provisions for revocation application, Impact of COVID-19 pandemic on financial losses, Applicability of period of limitation extension, Authority's duty to consider extension, Power of Writ Court to condone delay.

Analysis:
The petitioner challenged the cancellation of their GST registration without prior notice, arguing a violation of natural justice and statutory provisions. The cancellation order was issued without personal notice, leading to suspension and subsequent cancellation, affecting the petitioner's livelihood. The appeal against cancellation was dismissed as time-barred, as the petitioner missed the deadline due to lack of personal notice. The petitioner highlighted financial losses due to the pandemic as the reason for non-compliance with return filing requirements under GST rules.

The High Court noted the Apex Court's order extending limitation periods due to the COVID-19 pandemic. The Appellate Authority failed to consider this extension while dismissing the appeal solely on the grounds of limitation. The Court emphasized the importance of compliance with statutory provisions and the need to balance the interests of the assessee and revenue. It recognized that non-revocation of GST registration could prejudice only the assessee, not third parties or revenue, and ordered a re-hearing of the appeal on merits.

The Court observed that the purpose of limitation is to ensure compliance and protect third-party rights. It acknowledged the Writ Court's power to condone delays and directed the Appellate Authority to re-hear the appeal without dismissing it on limitation grounds. The respondent authority was instructed to inform the petitioner of outstanding dues, revoking the cancellation upon payment. The petitioner was required to continue periodic statutory dues payments post-revocation as per CGST Act.

In conclusion, the High Court disposed of the writ petition, setting aside the appeal dismissal and ordering a re-hearing on merits. It emphasized the need for compliance, considered the impact of the pandemic on the petitioner's situation, and exercised its power to ensure justice by directing revocation of the GST registration upon payment of outstanding dues.