GST registration cancellation set aside due to COVID-19 impact and limitation period extension under Section 30

HC set aside GST registration cancellation order dated 07.09.2021. Though limitation period under Section 30 CGST Act had expired for revocation application, court noted authorities failed to consider Supreme Court orders on limitation extension during COVID-19. Petitioner's non-compliance attributed to pandemic-related financial losses. Court observed that non-revocation prejudices only the assessee without creating third-party rights, and excluding petitioner from GST regime may harm revenue collection. Matter remanded to departmental authority for reconsideration of revocation application.

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Issues involved: Impugning the cancellation of GST registration u/s 29 of the Central Goods and Services Tax Act, 2017 without proper notice to the petitioner.

Summary:
The petitioner, engaged in works contracts with the Public Works Departments, had their GST registration cancelled without prior notice. The cancellation was based on a notice issued under Section 29 (2) of the CGST Act, 2017, which was uploaded on the department's website without personal service. This lack of notice violated natural justice principles and the GST Act. The petitioner's livelihood was affected due to the cancellation, hindering their business activities.

The petitioner, upon discovering the suspension and subsequent cancellation of GST registration, found the time limit for filing appeals had lapsed due to the lack of personal notice. With no alternative remedy available, the petitioner filed a writ petition seeking relief. The petitioner had already paid the statutory dues, emphasizing compliance with obligations.

The High Court noted that the Apex Court had extended the limitation period due to the COVID-19 pandemic, which encompassed the dates relevant to the petitioner's case. The authorities failed to consider this extension, leading to the cancellation of GST registration without due process. Reinstating the registration was crucial for the petitioner to fulfill tax obligations and benefit the revenue.

Rule 23(1) of the GST Rules of 2017 mandates filing for revocation only after fulfilling tax obligations. The petitioner's default in submitting returns was attributed to financial losses from the pandemic. The purpose of limitation in statutes is to ensure compliance and protect third-party rights. Revoking the cancellation of GST registration would benefit revenue collection and not prejudice any party.

The High Court set aside the order of cancellation and remanded the matter to the department for reconsideration. The respondent authority was directed to inform the petitioner of outstanding dues, which upon payment would lead to the revocation of the GST registration cancellation. The petitioner was instructed to continue periodic payment of statutory dues as per the CGST Act, 2017. The writ petition was disposed of with no costs incurred.

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