2022 (11) TMI 428 - HC - GST

GST Registration Wrongly Canceled: Rule 25 Violation Leads to Restoration of Taxpayer's Compliance Status

HC found the GST registration cancellation invalid due to procedural non-compliance. The respondent failed to follow Rule 25 of CGST Rules, 2017, ... Physical verification of business premises in presence of the person - Compliance with Rule 25 of the Central Goods and Services Tax Rules, 2017 - Upload of verification report in FORM GST REG-30 within fifteen working days - Cancellation of GST registration on ground of non existence at registered address - Restoration of registration and limited time window to file returns for period of cancellationPhysical verification of business premises in presence of the person - Compliance with Rule 25 of the Central Goods and Services Tax Rules, 2017 - Upload of verification report in FORM GST REG-30 within fifteen working days - Validity of cancellation of the petitioner's GST registration where physical verification was carried out without giving the petitioner presence as required and the verification report was not uploaded in FORM GST REG-30 within the statutory period - HELD THAT: - The court held that Rule 25 mandates that where the proper officer deems physical verification necessary, such verification must be carried out in the presence of the person and the verification report together with other documents including photographs must be uploaded in FORM GST REG-30 on the common portal within fifteen working days of verification. In the present case the record showed that no notice was issued requiring the petitioner's presence at the time of verification and the verification report, though generated, was not uploaded on the portal within the stipulated period. The counter affidavit did not address compliance with Rule 25. In those circumstances, and having regard to the court's earlier decisions on the same issue, the impugned order of cancellation could not be sustained and the registration had to be restored. [Paras 9, 10, 11, 12, 13]Impugned cancellation set aside and petitioner's GST registration restored.Restoration of registration and limited time window to file returns for period of cancellation - Relief and consequential direction upon restoration of registration - HELD THAT: - On restoring the petitioner's registration the court directed that the revenue shall give the petitioner eight weeks' leeway to upload the returns for the period during which the registration stood cancelled. This remedial direction was incidental to the principal relief of setting aside the cancellation order. [Paras 13, 14]Respondents to permit the petitioner eight weeks to upload returns for the period of cancelled registration.Final Conclusion: The order cancelling the petitioner's GST registration was quashed for non compliance with Rule 25 (absence of the petitioner at physical verification and failure to upload the FORM GST REG-30 report within the stipulated period); the petitioner's registration is restored and the revenue is directed to allow eight weeks for uploading returns for the period of cancellation. Issues:1. Cancellation of GST registration without proper adherence to statutory rules and procedures.Detailed Analysis:Issue 1: Cancellation of GST registration without proper adherence to statutory rules and proceduresThe High Court addressed the issue of the cancellation of the petitioner's GST registration without following proper procedures. The petitioner's registration was canceled based on the grounds that the petitioner was not found at the address registered with the authorities. However, the petitioner had informed the concerned authority about the relocation of its principal place of business in June 2018. The petitioner had also responded to the show cause notice dated 04.12.2018 by mentioning both the old and new addresses. The respondent argued that the application for amendment and the reply were not considered as they were not uploaded on the designated portal. The Court examined Rule 25 of the Central Goods and Services Tax Rules, 2017, which mandates physical verification of the business premises in certain cases. The rule requires that if physical verification is necessary, it should be done in the presence of the concerned person, and a verification report along with other documents must be uploaded within 15 working days. In this case, physical verification was carried out without notifying the petitioner to be present, and the verification report was not uploaded as required by the rule. The Court cited previous judgments to support its decision that the cancellation of GST registration cannot be sustained due to non-compliance with statutory provisions. Consequently, the petitioner's GST registration was ordered to be restored, and the respondents were given eight weeks to upload the returns for the period when the registration was canceled.This detailed analysis highlights how the High Court examined the cancellation of the petitioner's GST registration in light of the statutory rules and procedures, ultimately ruling in favor of the petitioner due to non-compliance with the necessary requirements.