GST registration cancellation overturned despite missed deadline due to Covid-19 pandemic circumstances and nil returns

The HC allowed the writ petition challenging cancellation of GST registration. The petitioner failed to file returns during Covid-19 and subsequently filed only nil returns, leading to registration cancellation. Though the revocation request was not filed within the statutory 90-day limitation, the court considered the pandemic circumstances and held that keeping the petitioner out of the GST regime would serve no useful purpose since business activities would continue regardless.

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Issues:
1. Cancellation of GST registration due to non-filing of returns during the Covid-19 pandemic.
2. Delay in filing representation for revocation of cancellation.
3. Applicability of statutory limitation for filing revocation request.
4. Comparison with similar cases where delay was condoned.
5. Appeal remedy before the Appellate authority.
6. Consideration of reviving registration to continue business under the GST regime.

Analysis:
1. The petitioner faced cancellation of GST registration due to non-filing of returns during the Covid-19 pandemic, leading to a notice dated 04.01.2021. The petitioner's business was affected by the pandemic, resulting in failure to file returns. After discovering the cancellation in May 2022, the petitioner filed pending returns up to August 2022, including nil returns. The petitioner's attempt to file a representation for revocation was rejected due to exceeding the statutory limitation of 90 days.

2. The petitioner argued that the period from 15.03.2020 to 28.02.2022 should be excluded for computing the limitation, citing directions from the Principal Secretary/Commissioner of Commercial Taxes. Referring to a previous case where delay was condoned, the petitioner sought relief based on similar circumstances.

3. The respondents contended that the petitioner should have pursued the appeal remedy before the Appellate authority instead of directly approaching the Court. The respondents urged for the dismissal of the writ petition on this ground.

4. The Court compared the present case with similar instances where delays in filing appeals or writ petitions were observed. Despite delays, the Court recognized the importance of integrating businesses back into the GST regime to ensure compliance and revenue collection. Emphasizing the need to prevent unintended privileges, the Court decided to grant relief to the petitioners under certain safeguards.

5. Considering the overall facts and circumstances, the Court opined that reviving the registration of the petitioners would serve the purpose of maintaining tax compliance and preventing revenue loss. The Court issued specific directions for the petitioners to follow, including filing pending returns, paying outstanding taxes, and adhering to GST regulations to resume business activities legitimately.

6. The Court allowed the writ petition with the specified conditions to ensure proper compliance and integration of the petitioners back into the GST regime, emphasizing the importance of following tax laws and procedures for conducting business lawfully.

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