2024 (7) TMI 43 - HC - GST

Cancellation of GST registration of petitioner - failure to file returns for more than six months as stated under section 29 of the GST Act - HELD THAT - Section 29 of the GST Act, 2017 deals with cancellation or suspension of registration, and clause (c) of sub-section (2) of section 29 states that the competent authority may cancel the registration of a person if he has not furnished returns for a continuous period of six months. Therefore, reading of the said provision indicates that the competent authority before cancelling the registration certificate should assign reasons for cancellation of the registration. In the instant case the 2nd respondent has not assigned reasons except stating that the petitioner has not filed returns for six months and the order cancelling the registration certificate issued in favour of the petitioner is one without application of mind and adversely affects the right of the petitioner to carryon a business as guaranteed under Article 19(1)(g) of the Constitution of India. The petitioner after cancellation of the registration certificate has tendered the entire arrears of tax including interest, penalty and late fees for filing the returns belatedly. Such being the case, the cancellation of the registration certificate granted in favour of the petitioner would be arbitrary and discriminatory. The impugned order passed by the 1st respondent cancelling registration of the petitioner, produced at Annexure-F are hereby quashed - petition allowed.

Summary

Issues:
Cancellation of registration certificate for not filing returns within six months under section 29 of the GST Act. Dismissal of appeal by the 1st respondent due to filing after the limitation period.

Analysis:
The petitioner, engaged in providing hostel accommodation services, had their registration certificate cancelled for not filing returns for over six months, as per section 29 of the GST Act. An appeal was filed, but it was dismissed by the 1st respondent due to being filed after the limitation period without any provision for condonation. The petitioner argued that the delay was due to the order not being communicated promptly and that they had paid all arrears. The State contended that the cancellation was justified as per the law and the appeal dismissal was correct.

Upon review, the court found that as per section 29 of the GST Act, cancellation of registration requires assigning reasons, which was lacking in this case. The cancellation without proper reasoning was deemed arbitrary and affecting the petitioner's right to conduct business under Article 19(1)(g) of the Indian Constitution. The petitioner had cleared all dues post-cancellation, making the cancellation appear discriminatory and unjust. Consequently, the court allowed the writ petition, quashed the impugned orders, and directed the restoration of the registration certificate to the petitioner for filing returns under the GST Act.