2025 (1) TMI 721 - HC - GST

Cancellation of GST registration - Registration cancelled for not filing the returns for a continuous period of 6 months - right to seek restoration of GST registration through the High Court after the lapse of the appeal period prescribed under Section 107 of the CGST Act, 2017 - HELD THAT - The petitioner is engaged in execution of works contract. Under the GST regime, the petitioner was required to pay the necessary dues under the CGST or SGST as the case may be or both. These statutory dues are required to be paid by all entities who are registered under the GST regime. Such payments of statutory due(s) contribute towards the revenue collection by the Union. If the petitioner is not included within the GST regime, then any statutory dues that may be required to be deposited by the petitioner will not be deposited and which will not be in the interest of the revenue. Therefore, in order that the petitioner is required to comply with his statutory obligations of payment of taxes under the GST regime, it would be necessary for the departmental authorities to re-consider the prayer of the petitioner for revocation of his cancellation of GST registration. It is directed that the Respondent No. 3, namely Superintendent of Central Goods Services Tax, Guwahati will intimate the petitioner the total outstanding statutory dues, if any, standing in the name of the petitioner till the date of cancellation of his GST registration. Petition disposed off.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the cancellation of the petitioner's GST registration due to non-filing of returns for six months was justified under the GST Act, 2017.
Whether the petitioner has the right to seek restoration of GST registration through the High Court after the lapse of the appeal period prescribed under Section 107 of the CGST Act, 2017.
What are the conditions under which the GST registration cancellation can be revoked by the respondent authority?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification of GST Registration Cancellation

Relevant Legal Framework and Precedents: The GST Act, 2017 mandates the filing of GST returns. Non-compliance can lead to cancellation of registration. The Act provides a framework for issuing a show cause notice before cancellation.
Court's Interpretation and Reasoning: The court acknowledged the procedural compliance by the respondent authority in issuing a show cause notice. However, it emphasized the importance of revenue collection and the need for the petitioner to be within the GST regime to fulfill statutory obligations.
Key Evidence and Findings: The petitioner failed to file GST returns for six months due to personal issues. The cancellation was procedurally correct but potentially detrimental to revenue interests.
Application of Law to Facts: The court applied the provisions of the GST Act, emphasizing the need for compliance but also considering the broader implications on revenue collection.
Treatment of Competing Arguments: The petitioner argued for restoration citing similar precedents. The respondent did not dispute the existence of such precedents but maintained procedural correctness.
Conclusions: The cancellation, while procedurally justified, needed reconsideration in light of revenue interests and precedents allowing restoration upon payment of dues.

Issue 2: Right to Seek Restoration Post-Appeal Period

Relevant Legal Framework and Precedents: Section 107 of the CGST Act, 2017 outlines the appeal process, including time limits. The court considered precedents where similar restoration was granted post-appeal period.
Court's Interpretation and Reasoning: The court recognized the petitioner's inability to appeal due to time constraints and considered the broader judicial trend of allowing restoration in similar cases.
Key Evidence and Findings: The petitioner missed the appeal deadline and sought direct court intervention. The court noted similar cases where restoration was granted.
Application of Law to Facts: The court applied judicial precedents to justify direct intervention despite the lapse of the appeal period.
Treatment of Competing Arguments: The petitioner relied on precedents for restoration. The respondent acknowledged these precedents, allowing the court to consider them in its decision.
Conclusions: The court concluded that direct intervention was warranted, aligning with precedents and considering the petitioner's circumstances.

Issue 3: Conditions for Revocation of Cancellation

Relevant Legal Framework and Precedents: The GST Act allows for revocation of cancellation upon compliance with statutory dues. Precedents indicate restoration upon payment of outstanding dues.
Court's Interpretation and Reasoning: The court directed the respondent to inform the petitioner of outstanding dues and allowed restoration upon payment, following established precedents.
Key Evidence and Findings: The court found that restoration had been granted in similar cases upon payment of dues.
Application of Law to Facts: The court applied the principle of allowing restoration upon compliance with statutory obligations.
Treatment of Competing Arguments: The petitioner argued for restoration upon payment. The respondent did not oppose this condition, facilitating the court's directive.
Conclusions: The court concluded that restoration should be granted upon payment of outstanding dues, aligning with legal provisions and precedents.

3. SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning: "In order that the petitioner is required to comply with his statutory obligations of payment of taxes under the GST regime, it would be necessary for the departmental authorities to re-consider the prayer of the petitioner for revocation of his cancellation of GST registration."
Core Principles Established: The court established that procedural compliance is crucial, but broader revenue interests and judicial precedents must guide decisions on restoration of GST registration.
Final Determinations on Each Issue: The court set aside the cancellation order, directing the respondent to inform the petitioner of outstanding dues and restore registration upon payment, aligning with similar precedents.

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