GST registration cancellation revoked for business that filed nil returns during pandemic under Section 29(2)(C)

The Madras HC allowed a petition for revocation of registration cancellation under Section 29(2)(C) of the CGST Act. The petitioner failed to file returns for six continuous months during the Covid-19 pandemic period, subsequently filing only nil returns as no business was conducted. Despite delays in filing the appeal and writ petition beyond statutory limitations, the court considered the overall circumstances and held that keeping the petitioner outside the GST regime would serve no useful purpose, as the assessee would continue business operations and supply goods/services.

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Issues involved:
Cancellation of GST registration due to failure to file returns for a continuous period of six months during the Covid-19 pandemic; Petitioner's attempt to revoke cancellation beyond the statutory limitation of 90 days; Commissioner's direction to exclude the pandemic period for computing limitation; Comparison with similar cases where delay was condoned; Respondent's argument of failure to respond to show cause notice and appeal remedy; Court's analysis of the petitioner's situation during the pandemic; Decision to grant relief and revive registration with specific conditions.

Analysis:
The judgment pertains to the cancellation of GST registration of the petitioner due to failure to file returns for a continuous period of six months during the Covid-19 pandemic. The petitioner, a proprietor of a business, faced challenges as the business shut down and he suffered from ill-health during the pandemic, leading to the inability to engage the accountant and file returns. The petitioner received a show cause notice for cancellation but failed to respond within the stipulated time frame, resulting in the cancellation of registration. The petitioner attempted to file a representation for revocation beyond the statutory limitation of 90 days, which was not accepted.

The Commissioner of Commercial Taxes had directed to exclude the pandemic period for computing the limitation, citing an order of the Hon'ble Apex Court. The petitioner relied on past cases where delays were condoned by the Court in similar circumstances. However, the respondent argued that the petitioner failed to file returns and appeal in a timely manner, opting to approach the Court directly. The respondent sought dismissal of the writ petition based on these grounds.

The Court considered the petitioner's situation during the pandemic, where business activities were halted, and noted similarities with past cases where delays were condoned. The Court emphasized the importance of integrating businesses back into the GST regime to ensure compliance and revenue generation. The judgment granted relief to the petitioner, quashing the cancellation order and reviving the registration with specific safeguards and conditions.

The Court outlined detailed conditions for the petitioner to follow, including filing past returns with defaulted taxes, paying interest, fines, and fees, and complying with GST regulations moving forward. The Court restricted the utilization of Input Tax Credit until approved by competent authorities, ensuring no misuse of benefits. The judgment highlighted the need for businesses to operate legitimately within the GST framework and directed the respondents to facilitate the necessary changes in the GST Web portal for compliance.

In conclusion, the Court allowed the writ petition, subject to the specified conditions, to revive the petitioner's registration and enable continued business operations within the GST regime.

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