Assessee commitment to file return for default period is ground for setting aside of order cancelling GST registration on account of non-filing of returns

The Hon’ble Calcutta High Court in the case PRANABESH SARKAR VERSUS SUPERINTENDENT CGST & CX, KALYANI DIVISION, RANGE-V & ORS. - 2024 (9) TMI 392 - CALCUTTA HIGH COURTset aside the order of GST registration cancellation on the ground that the Assessee has defaulted in filing of GST returns, on the ground that the Assessee would file the GST returns for the default period along with payment of tax, interest, fine and penalty.

Facts:

Pranabesh Sarkar (“the Petitioner”) received a Show Cause Notice dated July  8, 2022 (“the SCN”) from the Revenue Department  in which the Petitioner was directed to submit reasons as to why Petitioner GST registration should not be cancelled due to non-filing of returns for continuous period of past six months.  Thereafter, the Revenue Department passed the order dated August 24, 2022 (“the Impugned Order”) wherein the Revenue Department cancelled the GST Registration. Aggrieved by the Impugned Order passed, the Petitioner filed a writ petition against the passing of the Impugned Order submitting that the Petitioner is willing to file the required returns as a pre-condition for restoration of GST registration. In this regard reliance is placed upon the judgment of the Hon’ble Calcutta High Court in the case of SUBHANKAR GOLDER VERSUS ASSISTANT COMMISSIONER OF STATE TAX, SERAMPORE CHARGE & ORS. - 2024 (5) TMI 1262 - CALCUTTA HIGH COURT, wherein order of similar nature was passed in the aforesaid scenario.

Issue:

Whether Assessee commitment to file return for default period is ground for setting aside of order cancelling GST registration on account of non-filing of returns?

Held:

The Hon’ble Calcutta High Court in the case of PRANABESH SARKAR VERSUS SUPERINTENDENT CGST & CX, KALYANI DIVISION, RANGE-V & ORS. - 2024 (9) TMI 392 - CALCUTTA HIGH COURTheld as under:

• Opined that, the registration of the Petitioner has been cancelled only on account of non-filing of returns. Further, the suspension/revocation of license would be counterproductive and works against the interest of the revenue since, as the Petitioner in the said case would not be able to carry on his business as no invoice can be raised by the Petitioner and would impact recovery of tax.

Relying upon the aforesaid judgment, the Hon’ble High Court set aside the Impugned Order subject to the condition that the Petitioner duly filed the return for the default period and pay amount of tax, interest, fine and penalty arising thereof, if any.

Relevant Provision:

Section 29(2) of the CGST Act

Section 29: Cancellation or suspension of registration.

(2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,––

(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed; or

(b) a person paying tax under section 10 has not furnished the return for a financial year beyond three months from the due date of furnishing the said return; or

(c) any registered person, other than a person specified in clause (b), has not furnished returns for such continuous tax period as may be prescribed; or

(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or

(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:

Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard.

Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed.

 (Author can be reached at [email protected])