2022 (10) TMI 676 - HC - GST

Court Overturns Order, Enables Taxpayer Compliance & Business Continuity Amid Pandemic Challenges.

M/s. DURGA RAMAN PATNAIK Versus ADDITIONAL COMMISSIONER OF GST (APPEALS) (FIRST APPELLATE AUTHORITY) & OTHERS

The HC set aside the Appellate Order dated 07.10.2021, allowing the petitioner to file returns and pay due taxes, interest, penalty, and late fees within ... Cancellation of registration of petitioner - non-filing of returns for consecutive period of six months - Section 29(2)(c) of Central Goods and Services Tax Act, 2017 - the petitioner preferred appeal under Section 107 of the CGST Act on 05.08.2021 with a delay of around 660 days which came to be rejected on 07.10.2021 - HELD THAT:- Minute reading of N/N. 76/2018- Central Tax [GSR 1253(E)], dated 31st December, 2018 gives indication that the Government have been considerate in extending the benefit to the taxpayers who could not file returns for the months/quarter(s) of July, 2017 to April, 2021 within statutory period specified. As the registration certificate of the petitioner stood cancelled since 15.10.2019 by the time amendments to Notification No.76/2018- Central Tax [GSR 1253(E)], dated 31st December, 2018 came into force, there was no scope left for availing the advantage conferred thereunder. It is observed that the order of cancellation of registration was passed with effect from 15.10.2019 and in terms of Section 107 the petitioner was required to file the appeal within three months from the date of communication of the order and further condonable period available was one month therefrom. In the present case total period lapsed on 14.02.2020 - The Hon’ble Supreme Court of India in PRAKASH CORPORATES VERSUS DEE VEE PROJECTS LIMITED [2022 (2) TMI 1268 - SUPREME COURT] took cognizance of “unprecedentedly unfavourable and unpleasant” situation faced by entire humanity from or around the month of December 2019. The Appellate Authority, while passing order on 07.10.2021, had no occasion to take into consideration the orders of the Hon’ble Court more particularly Cognizance for Extension of Limitation, In re, [2022 (1) TMI 385 - SC ORDER]. An identical fact-situation arose before the Hon’ble Gujarat High Court [2022 (4) TMI 751 - GUJARAT HIGH COURT], where the Appellate Authority did not entertain appeal on the ground of limitation qua cancellation of registration being made on 10.07.2019. It is pertinent to say that writ petition is maintainable challenging the order in appeal, albeit the petitioner is entitled to carry the matter before the Appellate Tribunal under Section 112 of the CGST Act inasmuch as even after lapse of 5 years, the said Appellate Tribunal is not constituted under Section 109. Since the Appellate Tribunal has not yet been constituted as per Section 109 of the CGST Act, there being no alternative remedy available for the petitioner to question the veracity of the order passed in the first appeal, this Court prefers to exercise its writ jurisdiction to undo prejudice and injustice caused to the petitioner. Thus, this Court is of the considered view that grave injustice would ensue if extraordinary jurisdiction under Article 226 of the Constitution of India is not exercised. In the present case scales of justice weigh in favour of the petitioner. The petitioner is permitted to file returns for the period prior to the cancellation of registration, if such returns have not already been filed, together with tax defaulted which has not been paid prior to cancellation along with interest for such belated payment of tax and statutory payments and fee fixed for belated filing of returns for the defaulted period under the provisions of the Act, within a period of sixty days (60) days from the date of receipt of a copy of this Judgment, if it has not been already paid - Petition allowed. Issues Involved:1. Cancellation of GST Registration.2. Appeal against cancellation and its rejection due to delay.3. Legal provisions and notifications relevant to the case.4. Extraordinary jurisdiction under Article 226/227 of the Constitution.5. Impact of COVID-19 pandemic on legal deadlines.6. Right to carry on business and constitutional rights.Detailed Analysis:1. Cancellation of GST Registration:The petitioner, a proprietorship concern, challenged the cancellation of its GST registration by the Superintendent, Berhampur-I Range, under Section 29(2)(c) of the CGST Act due to non-filing of returns for six consecutive months. The cancellation was effective from 15.10.2019.2. Appeal Against Cancellation and Its Rejection Due to Delay:The petitioner filed an appeal against the cancellation order on 05.08.2021, which was delayed by around 660 days. The appeal was rejected on 07.10.2021 by the Appellate Authority on the grounds of limitation. The petitioner argued that the Appellate Authority should have considered the genuine difficulties faced due to the pandemic and the various notifications extending deadlines.3. Legal Provisions and Notifications Relevant to the Case:The petitioner referenced several notifications and amendments, including Notification No.19/2021-Central Tax, dated 01.06.2021, and Notification No.34/2021-Central Tax, dated 29.08.2021, which provided relief and extended timelines for filing returns and applications for revocation of cancellation. The petitioner argued that these notifications were intended to assist taxpayers affected by the pandemic and should have been considered by the Appellate Authority.4. Extraordinary Jurisdiction Under Article 226/227 of the Constitution:The petitioner invoked the extraordinary jurisdiction of the High Court under Article 226/227, arguing that the Appellate Authority's rejection of the appeal on technical grounds of limitation was unjust, especially given the pandemic's impact. The High Court noted that the Appellate Tribunal under Section 109 of the CGST Act had not been constituted, leaving the petitioner without an alternative remedy.5. Impact of COVID-19 Pandemic on Legal Deadlines:The Court acknowledged the unprecedented impact of the COVID-19 pandemic on legal proceedings and deadlines. The Supreme Court had extended limitation periods due to the pandemic, recognizing the extraordinary circumstances. The High Court found that the Appellate Authority failed to consider these extensions and the relevant notifications.6. Right to Carry on Business and Constitutional Rights:The Court emphasized that the cancellation of GST registration affected the petitioner's right to carry on business, protected under Article 19(1)(g) of the Constitution. Denying the petitioner the opportunity to restore its registration would violate its right to livelihood under Article 21. The Court cited various judgments supporting the view that the GST regime should facilitate business rather than hinder it.Conclusion:The High Court set aside the Appellate Order dated 07.10.2021 and issued the following directions:1. The petitioner is permitted to file returns and pay the due taxes, interest, penalty, and late fees within 60 days.2. Payment must be made without utilizing any unclaimed Input Tax Credit.3. Upon compliance, the petitioner can file an application for revocation of cancellation within 7 days, which the proper officer must consider favorably.4. The GST Network must ensure no technical glitches during this process.5. The entire process must be completed within 90 days.6. The concerned authority may verify the claims made in the returns and take appropriate actions as per law.The writ petition was allowed, emphasizing the need to balance legal compliance with the practical difficulties faced by taxpayers, especially during the pandemic.