2023 (3) TMI 1260 - HC - GST

Cancellation of GST registration of petitioner - failure to file statutory returns - time limitation - Section 29 of the Central Goods and Services Tax Act, 2017 - HELD THAT - Under Rule 23(1) of the GST Rules of 2017 it is provided that no application for revocation shall be filed 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. The reasons for default on the part of the petitioner to submit its periodical returns as required under GST Act and the Rules, as pleaded in the present proceedings, are attributed to the financial losses suffered by the petitioner because of the COVID- 19 Pandemic situation - According to the petitioner, the appeal is filed beyond the period of limitation. However, no such order has been passed by the Appellate Authority in the appeal which is pending before the Appellate Authority. The purpose of limitation being prescribed in a statute is two fold, namely, to ensure compliance of the statutory provisions by the persons on whom the provisions of the statute are applicable and further to ensure that no third party rights which may have been created in the meantime are permitted to be nonPage suited/unsettled - No prejudice is caused to any other person, if the GST registration of the petitioner/assessee is revoked. No prejudice is caused to the revenue. In the present case since an appeal is already preferred and is pending before the Appellate Authority, it is deemed appropriate not to remand the matter back to the concerned authority, namely, respondent No. 5, namely, the Superintendent, Central Goods and Service Tax, Doomdooma, District- Tinsukia, Assam for revocation of the cancellation of GST Registration. The Appellate Authority is fairly empowered to pass adequate and appropriate orders for revocation of the cancellation of GST registration upon being satisfied on the facts and circumstances that may be presented before the Appellate Authority. A writ Court is empowered to condone the delay of any statutory or quasi judicial authority - Such power is inherent in a Writ Court - reliance can be placed in the case of Commissioner of Income Tax-12 Vs- Pheroza Framroze and Company 2017 (5) TMI 436 - SUPREME COURT . It is directed that the respondent No. 5, namely, the Superintendent, Central Goods and Service Tax, Doomdooma, District- Tinsukia, Assam will intimate the petitioner the total outstanding statutory dues standing in the name of the petitioner till the date on which his GST registration was cancelled. Upon such intimation, if any such outstanding statutory dues under GST is required to be paid the same shall be deposited by the petitioner without fail. Petition disposed off.

Summary

Issues:
Cancellation of GST registration due to non-compliance with statutory returns during COVID-19 pandemic, appeal filed beyond limitation period, revocation of cancellation of GST registration, authority to pass orders for revocation, outstanding statutory dues, disposal of appeal by the Appellate Authority.

Analysis:
The writ petition challenged the cancellation of GST registration of the petitioner due to non-compliance with the provisions of the Central Goods and Services Tax Act, 2017 during the COVID-19 pandemic, which caused financial losses to the petitioner's tea manufacturing business. The petitioner failed to file statutory returns, leading to the cancellation of registration. Subsequently, the petitioner revived the business, filed returns up to April 2022, and attempted to apply for revocation, but it was not filed within the prescribed period. An appeal was filed under Section 107 against the cancellation, pending before the Appellate Authority. The petitioner argued that the cancellation was unjustified as returns were now filed, and the financial losses due to the pandemic were the reason for non-compliance, affecting the livelihood. The petitioner sought revocation to continue the business.

The Court considered the provisions of Rule 23(1) of the GST Rules of 2017, stating that no revocation application can be filed without furnishing returns and paying due taxes, interest, penalties, and late fees. The petitioner attributed the default to financial losses from the pandemic and filed an appeal beyond the limitation period. The Court highlighted the purpose of limitation in statutes to ensure compliance and protect third-party rights. Non-revocation of GST registration may prejudice the assessee alone, not creating rights against third parties or revenue. Revocation would facilitate revenue collection under the GST regime.

Since the appeal was pending before the Appellate Authority, the Court decided not to remand the matter but empowered the Authority to decide on revocation based on presented facts. The Court emphasized its power to condone delays and directed the Appellate Authority to hear the appeal on merits without dismissing it on limitation grounds. The respondent authority was instructed to inform the petitioner of outstanding dues, which, upon payment, would enable the Appellate Authority to proceed with the appeal and pass appropriate orders after hearing the petitioner.

In conclusion, the Court disposed of the writ petition, ordering the Appellate Authority to hear the appeal on merits after the petitioner pays outstanding dues. The Authority was directed to decide on revocation after condoning any delays, ensuring a fair hearing for the petitioner.