2024 (2) TMI 171 - HC - GST

Cancellation of GST registration of the petitioner - returns for six months had not been filed - HELD THAT - The law provides that failure to furnish returns will result in cancellation of registration under Section 29(2)(c). Section 30 of the Act allows revocation of the order of cancellation of registration, subject to the condition that the returns are filed and all payments are made along with interest and penalty, if any. However, the time limit prescribed for filing an application for revocation of registration is 30 days from the date of service of the cancellation order - no mandatory order can be passed directing the authority to restore the GST registration of the petitioner as such order will be in contradiction to the provisions of Section 30 and the proviso to the said section. The law does not empower the authorities to extend the period of limitation in filing the application for revocation or for filing of appeal beyond the period prescribed in the statute itself, i.e., further 30 days or one month, as the case may be. This court is of view that it would not be proper to pass a mandatory order of restoration of the GST registration. The order of the learned Co-ordinate Bench, relied upon by the petitioner, is not clear on the facts and as such it is not possible for the court to understand whether in the said case, there had been any delay in approaching the High Court. The writ petition is disposed of, with direction upon the petitioner to file a comprehensive representation to the Joint Commissioner, State Tax, Siliguri Charge, within two weeks from date, indicating the reasons as to why the returns could not be filed with documentary evidence to justify that the situation led to non-filing of returns. The authority shall consider the said representation, upon hearing the petitioner and pass necessary orders upon consideration of the provisions of law in question and the contentions of the petitioner.

Issues involved:
The cancellation of GST registration due to failure to file returns and the subsequent legal proceedings challenging the cancellation.

Details of the Judgment:

1. The writ petition challenged the cancellation of the petitioner's GST registration by the Assistant Commissioner of State Tax, State GST, citing non-filing of returns for six months. The cancellation was made under Section 29(2) of the Central Goods and Services Tax Act, 2017, read with Rule 22 of the Central Goods and Services Tax Rules, 2017.

2. The petitioner's counsel argued that the company faced proceedings before the NCLT and the High Court, leading to the inability to file returns. The directorship of the company was also under question during this period.

3. It was mentioned that the bank account was frozen during the legal proceedings, and the Commissioner, GST Division, was informed about this development.

4. Despite not replying to the show cause notice, the petitioner had informed the authority about the pending litigation and reasons for non-filing of returns. The petitioner contended that the cancellation order was unreasoned and cryptic.

5. A prayer was made based on a decision of a Co-ordinate Bench, seeking restoration of registration and permission to pay the outstanding amount.

6. The State's counsel opposed the writ petition, highlighting that the petitioner approached the court belatedly.

7. The State's counsel emphasized the timelines for responding to show cause notices and applying for revocation of registration, as per the provisions of the law.

8. Reference was made to Rule 23 of the GST Rules, stating that no application for revocation shall be filed if registration was canceled for failure to file returns unless the returns are furnished and dues paid.

9. Due to the petitioner's failure to file returns for six months, the authority proceeded with the cancellation of registration.

10. It was argued that without filed returns, the calculation of the payable amount could not be completed.

11. The court highlighted the duty of registered persons to file returns under Section 39 of the Act, failure of which leads to registration cancellation under Section 29(2)(c).

12. Section 30 of the Act allows revocation of cancellation subject to conditions, including filing of returns and payment of dues within prescribed timelines.

13. The court emphasized strict construction of fiscal statutes, stating that the application for revocation must be filed within the specified time frame.

14. Section 107 provided for appeals against the impugned order within a specified period, without extension beyond the statutory limit.

15. The court reiterated that the law does not empower authorities to extend the limitation period for revocation or appeals.

16. Considering the facts, the court declined to pass a mandatory order for restoration of GST registration, noting ambiguity in the relied-upon precedent.

17. The respondents mentioned providing opportunities for filing returns beyond the specified period, which the petitioner did not utilize.

18. The court noted the lack of information regarding the duration of frozen bank accounts and the company's ability to file returns during that period.

19. The court highlighted the need for factual examination by authorities to determine the impact of pending disputes on the company's operations.

20. The court emphasized the necessity of assessing factual aspects before issuing mandatory orders.

21. The writ petition was disposed of with directions for the petitioner to submit a comprehensive representation to the Joint Commissioner, State Tax, explaining the reasons for non-filing of returns with supporting evidence.

22. The authority was directed to consider the representation, hear the petitioner, and make decisions based on relevant legal provisions and contentions.

23. If the petitioner's case was genuine and litigation hindered filing returns, the authority was to allow return filing and calculate payable amounts. Restoration of GST registration was contingent on full payment of dues.

24. The entire process was to be completed within four weeks from the receipt of the petitioner's representation.

25. The writ petition was disposed of without costs, and parties were instructed to act based on the court's order copy.

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