2023 (10) TMI 1074 - HC - GST

Cancellation of GST registration of petitioner - denial of an opportunity either file an appeal or to revoke the cancellation of registration - HELD THAT - The issue arising out the cancellation of registration was considered in detail by this Court in Tvl.Suguna Cut Piece Centre Vs. Appellate Deputy Commissioner 2022 (2) TMI 933 - MADRAS HIGH COURT , wherein, this Court had concluded that no useful purpose will be served by keeping the dealers/assessees outside the bounds of GST Act as they will continue to carry on the business. The denial of an opportunity either file an appeal or to revoke the cancellation of registration was held to be a defeating move as the dealer/assessee will still continue to do business and if they are not brought into the mere scheme, the revenue will be the looser. This Court is inclined to set aside the impugned order by directing the respondent to revive the GST registration of the petitioner with liberty to the respondent to initiate appropriate proceedings against the petitioner for imposing penalty and for recovering any tax due, to which, the petitioner may have failed to pay during the period, no returns were filed - Petition allowed.

Summary

Issues involved: Challenge to cancellation of GST registration, failure to file returns, failure to take benefit of Amnesty Scheme, failure to file application for revocation of cancellation, unknown transactions during period of non-filing of returns.

Judgment Summary:

Cancellation of GST Registration:
The petitioner challenged the order cancelling their GST registration, citing lack of business activity and non-filing of returns. The respondent argued that an Amnesty Scheme was in place allowing for revival of cancelled registrations, which the petitioner failed to utilize. Additionally, the petitioner did not follow the procedures for revocation of cancellation or appeal as per the CGST Act. The Court considered previous rulings and concluded that keeping dealers outside the GST Act would not serve any purpose, leading to the decision to set aside the cancellation order and revive the petitioner's GST registration. However, a moratorium of six months was imposed on the petitioner for discharging tax liabilities from Input Tax Credit and Electronic Credit Ledger.

Failure to File Returns and Amnesty Scheme:
The petitioner's failure to file returns and take advantage of the Amnesty Scheme were key points in the case. The respondent highlighted the Amnesty Scheme's provisions for reviving cancelled registrations, which the petitioner did not avail. The Court emphasized the importance of bringing dealers back into the GST Act to prevent revenue loss, ultimately deciding to revive the petitioner's registration while imposing a moratorium on tax liability discharge.

Procedural Failures and Unknown Transactions:
The respondent pointed out the petitioner's failure to follow procedures for revocation of cancellation or file an appeal, as required by the CGST Act. Additionally, the respondent raised concerns about unknown transactions during the period of non-filing of returns. Despite these issues, the Court decided to allow the writ petition, setting aside the cancellation order and reviving the petitioner's GST registration with certain restrictions on tax liability discharge.

Conclusion:
In conclusion, the Court allowed the writ petition, directing the respondent to revive the petitioner's GST registration while imposing a moratorium on tax liability discharge for six months. The petitioner was instructed to pay tax liabilities only from amounts credited in its Electronic Credit Ledger during this period. No costs were awarded, and the connected Writ Miscellaneous Petition was closed.