2024 (6) TMI 555 - HC - GST

Cancellation of the GST registration of the petitioner - failure to file returns for a continuous period of 6 months - HELD THAT - Admittedly, the registration of the petitioner had been cancelled on the ground of non-filing of returns. It is not the case of the respondents that the petitioner had been adopting dubious process to evade tax. Although, the appeal has been preferred the same has, however, been dismissed on the ground of limitation. Taking note of the fact that the suspension/revocation of license would be counterproductive and works against the interest of the revenue since, the petitioner in such a case would not be able to carry on his business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of tax, the respondents should take a pragmatic view in the matter and permit the petitioner to carry on his business. The order 27th May 2020 cancelling the registration of the petitioner is set aside subject to the condition that the petitioner files his returns for the entire period of default and pays requisite amount of tax, interest, fine and penalty. Petition disposed off.

Summary

Issues:
Challenge to cancellation of registration under GST Act due to non-filing of returns.

Analysis:
The petitioner challenged the order of cancellation of registration under the GST Act, claiming to be interested in complying with the Act by filing returns. The respondent authorities contended that the cancellation was due to the petitioner's non-compliance with statutory provisions. The court noted that the cancellation was based on non-filing of returns and not on tax evasion. The appeal against the cancellation was dismissed on the ground of limitation, but the court considered the impact of suspension/revocation on revenue recovery and permitted the petitioner to continue business upon compliance with conditions.

The court found that the petitioner's registration was cancelled for non-filing of returns and not for tax evasion. The court emphasized the importance of allowing the petitioner to carry on business to ensure revenue recovery. The respondents stated that final tax liability cannot be determined until the petitioner files returns. The court referred to a previous judgment and decided to set aside the cancellation order subject to the condition that the petitioner files returns for the default period and pays the necessary tax, interest, fine, and penalty.

The court directed the restoration of the petitioner's registration if compliance is met within four weeks. Failure to comply would result in dismissal of the writ petition. The respondents were instructed to open the portal for the petitioner to file returns and make payments within a week. The court disposed of the writ application without costs, and all parties were required to act based on the official order downloaded from the court's website.