REVOCATION OF CANCELLATION OF GST REGISTRATION

[Mr. M. GOVINDARAJAN]

Revocation

If the GST registration is cancelled by the Officer of his own, the registered person who certificate was cancelled may file an application for revocation of the cancelled certificate in Form GST REG – 21 on the common portal within 30 days from the date of cancellation of registration or such time period as extended by the proper officer.  For this purpose the registered person shall undergo authentication of aadhaar number under Rule 10B.  If Aadhaar number has not been assigned to the person required to undergo authentication of the Aadhaar number, such person shall furnish the following identification documents-

• her/his Aadhaar Enrolment ID slip; and
• Bank passbook with photograph; or
• Voter identity card issued by the Election Commission of India; or
• Passport; or
• Driving license issued by the Licensing Authority under the Motor Vehicles Act, 1988’

No application for revocation shall be filed, if the registration has been cancelled for the failure of the registered person to furnish returns, 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.

If the registration has been cancelled with retrospective effect, the registered person shall furnish all returns relating to period from the effective date of cancellation of registration till the date of order of revocation of cancellation of registration within a period of thirty days from the date of order of revocation of cancellation of registration.

If the proper officer is satisfied, for reasons to be recorded in writing, that there are sufficient grounds for revocation of cancellation of registration, he shall revoke the cancellation of registration by an order in Form GST REG-22 within a period of 30 days from the date of the receipt of the application and communicate the same to the applicant.

The revocation of cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a revocation of cancellation of registration under this Act.

Rejection of application

The proper officer shall issue a notice in Form GST REG–23 requiring the applicant to show cause as to why the application submitted for revocation should not be rejected. The applicant shall furnish the reply within a period of 7 working days from the date of the service of the notice in Form GST REG-24.   Upon receipt of the information or clarification in Form GST REG-24, the proper officer shall proceed to dispose of the application within a period of 30 days from the date of the receipt of such information or clarification from the applicant.

The proper officer may, for reasons to be recorded in writing, by an order in Form GST REG-05, reject the application for revocation of cancellation of registration and communicate the same to the applicant.

COVID

In DEEPAK VASUDE ASRANI CHUGH HUF VERSUS JOINT COMMISSIONER OF GST APPEALS – II, BANGALORE SUPERINTENDENT OF CENTRAL TAX RANGE AND -4, BENGALURU - 2022 (9) TMI 479 - KARNATAKA HIGH COURT on 17.07.2019 respondent No.2 cancelled the petitioner’s GST registration, aggrieved by which, an appeal was preferred by the petitioner on 12.08.2021 along with an application requesting for condonation of the delay having regard to the prevailing Covid-19 pandemic.  The Appellate Authority rejected the petitioner’s appeal and refused to condone the delay and passed the impugned order, which is assailed by the petitioner in the present appeal.  Therefore the petitioner filed the present writ petition before the High Court.  The High Court observed that the petitioner has explained the delay in seeking revocation of the GST cancellation by contending that the same was due to Covid-19 pandemic and on account of bona fide reasons and sufficient cause.  The High Court also observed that the Appellate Authority / respondent No.1 clearly committed an error in summarily rejecting the appeal filed by the petitioner and also rejecting the request to condone the delay in filing the appeal without assigning proper, valid and cogent reasons.  The High Court set aside the order of Appellate Authority.

Principles of Natural Justice

In any legal proceeding reasonable opportunities shall be given to the parties concerned which is according to the principles of Natural Justice.  Like that the show cause notice shall contain the allegations against the concerned person so as to enable him to file a reply to the show cause notice.

In LATIKA GHOSH VERSUS THE COMMERCIAL TAX OFFICER/ASSISTANT COMMISSIONER, WEST BENGAL GOODS & SERVICE TAX, RAIGANJ CHARGE & ORS. - 2022 (3) TMI 263 - CALCUTTA HIGH COURT the Department issued a show cause notice to the petitioner on 06.06.2018 proposing to cancel the registration certificate of the petitioner for the reason that the petitioner did not file return for a continuous period of 6 months.  The petitioner filed all returns and also the tax with interest and late fees.  The Department, however, cancelled the registration vide their order dated 08.02.2021.  The petitioner filed an application for revocation of the cancellation of registration.  The Authorities issued a show cause notice dated 11.09.2021 calling upon the petitioner to explain as to why the application for revocation should not be rejected on the ground that the petitioner has not paid the late fee for filing of the returns for the periods from 2017 – 18 to 2020 – 21.  The petitioner filed reply to the show cause notice.  The Authority on 06.10.2021 passed an order rejecting the application of the petitioner for revocation of cancellation of registration. 

The High Court observed that the State Authorities did not indicate to the petitioner as to how the computation of late fee and interest as done by the petitioner while filing the returns for the relevant period is incorrect.  The petitioner is having right to know for which a show cause notice should have been issued.  The High Court held that the exercise of jurisdiction of authorities is arbitrary and there is violation of principles of natural justice and the orders are devoid of reasons which would render unsustainable in the eyes of law.

In DRS WOOD PRODUCTS LUCKNOW THRU. ITS PARTNER SH. ARUN JINDAL VERSUS STATE OF U.P. THRU. PRIN. SECY. TAX AND REGISTRATION LKO. AND ORS. - 2022 (8) TMI 406 - ALLAHABAD HIGH COURT the High Court found that without relying upon any report or any inquiry conducted to form opinion or any basis on which allegation leveled and also not indicating as to when inspection was carried.  The show cause notice only alleged that ‘taxpayer found non-functioning/non-existing at principal place of business.  The show cause notice is vague.  Issuing of such vague notice is the indication of violation of principles of Natural Justice.  The application for revocation of cancellation of registration was rejected without recording any reasons and disclosed the absence of mind on the part of the Officers.  Further the request of the petitioner to adjourn the hearing because of his daughter’s marriage was not even considered.  The cancellation of registration is the arbitrary exercise of power which adversely affected the petitioner.  The High Court set aside the cancellation order and restored the registration certificate.

In K. KUMAR RAJA PROJECTS PVT. LTD. VERSUS ASSISTANT COMMISSIONER OF STATE TAX DURGAPUR CIRCLE STATE GOODS AND SERVICE TAX & ORS. - 2022 (4) TMI 1401 - CALCUTTA HIGH COURT, the appellant obtained registration certificate under the CGST Act.  On 18.11.2019 a show cause notice was issued to the petitioner as to why the registration should not be cancelled on the ground that the petitioner is non existence/non functioning at the place of business.  The registration was canceled on 18.11.2019 i.e., the same day on which the show cause notice was issued.  The appellant filed an appeal before the Appellate Authority.  The appeal was dismissed on 18.08.2020.  The appellant filed an application on 08.02.2022 for revocation of the cancellation of registration.  The same was cancelled on the same day itself.  The High Court was of the opinion that the authority committed a grave error in rejecting the application.  Further the order dated 18.08.2020 shows that the appellant was carrying on business.  The rejection of application is in total violation of principles of natural justice.  The High Court restored the application dated 08.02.2022 to the file of concerned authority.  The High Court directed the appellant to appear before the Authority with relevant records to prove that they were carrying on business within the State of Bengal.  The Authority is to give opportunity to the appellant and decide the case on merits and in accordance with the law.

Strictures

The High Court expressed their displeasure on the working of the GST Authorities.  The Courts have passed strictures on the officers on the manner of disposal of the cases.  The arbitrary exercise of power cancelling registration and revocation not only adversely affect the registered persons but also adversely affected the revenues that could have flown to coffers of GST in case the registered persons are permitted to carry out the commercial activities.

The Allahabad High Court in ‘DRS Wood Products’ (supra) directed the State Government to pay a cost of Rs.50000/- to the petitioner since the petitioner has been harassed since 20.05.2020.