2023 (12) TMI 1279 - HC - GST

Cancellation of petitioner s GST registration - failure to furnish the return for the continuous period of six months - HELD THAT - In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017 (CGST Act), a proper officer has a discretion to cancel a GST registration of a tax payer from such date (including retrospectively), as he considers fit. However, the discretion to cancel the GST registration from retrospective effect cannot be exercised arbitrarily or whimsically. Such decision to cancel the GST registration with retrospective effect must be informed by reason. In the present case, the impugned order does not indicate any reason for cancelling the petitioner s GST registration, let alone a reason for doing so retrospectively. Thus, the impugned order is liable to be set aside - In the present case, the petitioner s GST registration has been cancelled for failure to furnish return for the continuous period of six months. Clearly, this does not warrant cancellation of GST registration for the period during which the returns were filed. Petition disposed off.

Summary

Issues involved: Impugning the cancellation of GST registration with retrospective effect and the rejection of appeal based on limitation period.

Impugning the cancellation of GST registration with retrospective effect:
The petitioner challenged an order cancelling their GST registration with retrospective effect from 01.07.2017, citing lack of reason for the cancellation in the impugned order. The impugned show cause notice (SCN) proposed cancellation due to the petitioner's failure to file returns for six consecutive months. The petitioner admitted to not filing returns after 31.03.2022 but disagreed with the retrospective cancellation. The High Court noted that under Section 29(2) of the CGST Act, cancellation with retrospective effect must be reasoned and not arbitrary. As the impugned order lacked justification for the retrospective cancellation, it was set aside. The Court directed the cancellation to take effect from the date of the impugned SCN, i.e., 15.01.2023.

Rejection of appeal based on limitation period:
The petitioner's appeal against the cancellation was rejected by the Appellate Authority as it was filed beyond the limitation period. The Appellate Authority's order was also challenged. The High Court emphasized the importance of complying with statutory requirements and granted the petitioner four weeks to file returns up to 15.01.2023. The Court clarified that its order did not prevent authorities from taking action for any other violations of the CGST Act or for recovering outstanding taxes. Ultimately, the petition was disposed of with the aforementioned directions.