2021 (2) TMI 692 - HC - GST

Non-filing of Returns - sudden change in the status of the petitioner from a composite taxpayer to a regular taxpayer . - all on a sudden petitioner s nomenclature as an assessee was changed without even calling the petitioner for any hearing - HELD THAT - The fact remains that to change the status of a taxpayer and in the instant case, that of the petitioner, a procedure is laid down. The authority concerned without adopting such procedure cannot change the status of the petitioner. The respondents at the present, have not been able to show any proceedings, the outcome of which was the change in status of the petitioner. The matter is adjourned to enable the respondents to take the following instructions 1). Whether any proceeding was initiated by the respondents consequent upon which the status of the petitioner in the portal was changed from a composite taxpayer to a regular taxpayer. 2). Will the system allow the filing of the pending returns by the petitioner from the quarter commencing from 1st April, 2019 as a composite taxpayer without imposition of any late fee charges or other applicable charges if the portal is directed to be unlocked to allow the petitioner to file the returns up to 31st December, 2020. If not, what can be an alternative mode to allow the petitioner to file the pending returns without any late fee payment or other charges applicable for the delay. Let this matter be adjourned till 12th February, 2021 to enable the respondents to take instructions, which is necessary for effective adjudication of the matter.

Summary

Issues:
1. Change in taxpayer status from composite taxpayer to regular taxpayer without due procedure.
2. Inability to file returns as a composite taxpayer due to system restrictions.
3. Petitioner's representations against the change in status being unaddressed.
4. Adjourning the matter for the respondents to provide clarifications and instructions.

Analysis:
The judgment concerns the petitioner, who was initially allowed to file returns as a composite dealer under the CGST Act and the SGST Act. However, without following the prescribed procedure, the petitioner's status was abruptly changed to that of a regular taxpayer, preventing them from filing returns since April 2019. The petitioner raised objections through representations, but these were allegedly disregarded. The court emphasized that changing a taxpayer's status requires adherence to a specific procedure, which was not followed in this case by the authorities. As a result, the respondents were directed to provide information on any proceedings leading to the status change.

Regarding the second issue, the petitioner faced difficulties in filing returns as a composite taxpayer due to the system's inability to process returns in this altered status. The court sought clarification on whether the system could be modified to allow the petitioner to file pending returns without incurring late fees or other charges up to December 2020. If the system could not be adjusted, alternative methods to enable the petitioner to file returns without additional charges were to be explored.

The judgment reflects the court's concern over the procedural irregularities in changing the petitioner's taxpayer status and the subsequent challenges faced by the petitioner in filing returns. By adjourning the matter, the court provided an opportunity for the respondents to furnish necessary instructions and clarifications to address the issues raised, ensuring a fair and effective adjudication of the case.