GST registration cancellation quashed after taxpayer filed revocation application within COVID-19 extended limitation period

Gujarat HC allowed writ application for revocation of registration cancellation. Registration was cancelled due to non-filing of returns stemming from non-payment of tax. Court held that CBIC extended time limits for revocation applications, with limitation period for orders passed before 12.06.2020 commencing from 31.08.2020. Supreme Court's COVID-19 limitation extension applied to quasi-judicial proceedings. Applicants filed restoration request in July 2021 within extended period and paid outstanding tax liability in September 2021. HC quashed cancellation order dated 10.07.2019 and directed respondents to restore registration certificate under GST Act.

---

---

Issues:
1. Application for cancellation of registration certificate under GST Acts.
2. Time limit for filing application for revocation of cancellation.
3. Impact of Covid-19 pandemic on limitation period.
4. Grounds for cancellation of registration certificate.
5. Entitlement to seek relief for restoration of registration certificate.

Issue 1: Application for cancellation of registration certificate under GST Acts:
The writ-applicants, engaged in trading iron and steel scrap, were registered under the GST Acts. Financial difficulties led to non-filing of returns in 2019, resulting in a show cause notice proposing cancellation of their registration certificate. Despite explaining their financial constraints, the registration certificate was canceled on 10.7.2019 by the 3rd respondent authority, citing non-compliance as the reason. The writ-applicants were not physically served the cancellation order but were informed by their consultant about the necessity to file returns only after paying tax dues.

Issue 2: Time limit for filing application for revocation of cancellation:
The writ-applicants filed for restoration in July 2021 after managing to pay the tax dues on 06.09.2021. The appellate authority dismissed their request as time-barred by limitation. However, the Central Board of Indirect Taxes extended the time limit for such applications, and the Supreme Court's orders during the Covid-19 pandemic further extended the limitation period. The writ-applicants argued that their application was within the extended limitation period and should be considered valid.

Issue 3: Impact of Covid-19 pandemic on limitation period:
The writ-applicants contended that the orders of the Honorable Supreme Court extending limitation due to the pandemic applied to their case, as they filed for restoration during the period covered by the extension. They emphasized that the cancellation of their registration was solely due to non-payment of tax resulting from financial constraints, which they rectified by paying the outstanding tax amount.

Issue 4: Grounds for cancellation of registration certificate:
The cancellation of the registration certificate was based on the non-filing of returns due to financial difficulties beyond the control of the writ-applicants. Once they paid the outstanding tax, the reason for cancellation was resolved, and they sought restoration to resume their business activities.

Issue 5: Entitlement to seek relief for restoration of registration certificate:
After considering the arguments from both sides, the Court found that the writ-applicants were entitled to relief. The cancellation of the registration certificate was quashed and set aside, with a direction for immediate restoration by the respondents under the provisions of the GST Act. The Court acknowledged the writ-applicants' efforts to rectify the situation and permitted them to continue their business activities.

In conclusion, the High Court of Gujarat allowed the writ-application, quashing the cancellation of the registration certificate and ordering its restoration based on the writ-applicants' compliance with tax obligations and the extended limitation period due to the Covid-19 pandemic.

---