2024 (11) TMI 1406 - HC - GST

Cancellation of the GST registration without providing opportunity to be heard - violation of principles of natural justice - appeal preferred by the petitioner has been rejected on the ground of being filed after expiry of Limitation period as envisaged under Section 107 of the Central Goods and Services Tax Act, 2017 - HELD THAT - It appears that a show cause notice was issued to the petitioner (Annexure-2) which indicates that the reason for issuing show cause notice is that the petitioner failed to furnish the return for a continuous period of six months which is mandatory as per the CGST Act - The petitioner during course of argument had submitted that in the order of cancellation, it has been mentioned that the undersigned has examined the reply but fact remains that no reply was filed by the petitioner within the stipulated period and as such principles of natural justice has been denied to him. It is true that no reply of the petitioner was on record as informed by the CGST counsel; however, the fact remains that the petitioner failed to furnish return for a continuous period of six months. It further transpires that the appeal of the petitioner was also rejected on the ground of limitation as the same was filed after a lapse of more than 1 year and 20 days; whereas the normal period for filing appeal is three months as prescribed under section 107 (1) of CGST Act 2017. There are no hesitation in holding that the petitioner firm is not entitled for any relief on the ground of being lethargic in approach, inasmuch as, on the one hand, the petitioner did not file return for a continuous period of six months and on the other hand the petitioner filed appeal before the appellate forum after a delay of 1 year and 20 days which is admittedly beyond the period of three months for filing appeal as prescribed under the Act. Thus, neither there is any perversity in the order of cancellation of GST registration; nor is there any necessity for interference with the appellate order, inasmuch as, the same is filed beyond the statutory period of limitation - Accordingly, the instant writ application stands dismissed.

Summary

Issues:
Challenge to cancellation of GST registration without opportunity to be heard, appeal dismissal on grounds of limitation period, restoration of GST registration certificate, denial of principles of natural justice.

Analysis:

The petitioner, a trust engaged in social activities, received a show cause notice on 07.10.2022 regarding the cancellation of GST registration. The petitioner failed to reply within the stipulated period, and the registration was canceled on 16.11.2022 without a hearing. The subsequent appeal filed on 05.12.2023 was dismissed on 26.07.2024, citing a delay beyond the limitation period under Section 107 of the CGST Act.

The petitioner contended that the cancellation was unjust as the registration was suspended on the same day as the show cause notice, denying the principles of natural justice. Despite the petitioner's failure to reply within the deadline, the cancellation order claimed the reply was considered. The appellate authority upheld the cancellation based on the limitation period, not the merits, leading to the plea for quashing the cancellation and restoring the GST registration.

The respondent argued that the cancellation was justified as the petitioner failed to comply with the mandatory return filing requirements under Section 39 of the CGST Act. The petitioner's non-compliance led to the issuance of the show cause notice and eventual cancellation, warranting no interference with the decision.

The court noted that although no reply was filed by the petitioner, the failure to furnish returns for six consecutive months was established. The appeal dismissal was upheld due to the significant delay of over a year beyond the statutory three-month appeal period. Consequently, the court found no grounds to challenge the cancellation or the appellate order, emphasizing the petitioner's non-compliance and delay in filing the appeal.

In conclusion, the court dismissed the writ application, citing the petitioner's failure to meet statutory requirements and the significant delay in filing the appeal. The cancellation of the GST registration and the dismissal of the appeal were upheld, with no justification for interference.