2022 (11) TMI 1066 - HC - GST

GST Registration Cancellation: Diet Contractor Directed to File Appeal Within One Week Under Section 107 CGST Act

HC of Andhra Pradesh addressed a GST registration cancellation challenge involving a diet contractor supplying food to government hospitals. The court ... Cancellation of registration under GST - show cause notice - maintainability of writ petition where statutory appeal exists - right to appeal under Section 107 of the CGST Act, 2017 - inability to file Form GSTR 3B due to blocked GSTN / cancellation - opportunity to file returns and discharge tax with interest and late feeMaintainability of writ petition where statutory appeal exists - right to appeal under Section 107 of the CGST Act, 2017 - Whether the writ petition challenging the cancellation of registration is maintainable in view of the alternative statutory remedy of appeal under Section 107 of the CGST Act, 2017. - HELD THAT: - The Court observed that Section 107 provides a prescribed statutory remedy by which a person aggrieved by an order under the CGST Act may appeal to the appellate authority within the statutory period. Having regard to the statutory scheme and the availability of that specific remedy, the Court considered it appropriate to dispose of the writ petition by directing the petitioner to avail the alternate remedy. The Court therefore did not adjudicate the merits of the cancellation order but required the petitioner to approach the appellate authority within a limited period and for that authority to consider the matter under the relevant rules.Writ petition disposed of as not to be entertained on merits; petitioner permitted to file an appeal under Section 107 within one week of receipt of the order and the appellate authority directed to consider and decide the appeal in accordance with law within four weeks.Inability to file Form GSTR 3B due to blocked GSTN / cancellation - opportunity to file returns and discharge tax with interest and late fee - Treatment of the petitioner's inability to file past and subsequent returns because of non receipt of payment and alleged blocking of filing following cancellation of registration. - HELD THAT: - The Court recorded the petitioner's explanation that returns for May 2021 to January 2022 were not filed because of delayed payments by the Government and that, after paying the tax, interest and late fee for those months he could not file returns for subsequent months as the registration had been cancelled and the GSTN did not permit filing post cancellation. Rather than resolving these factual and consequential contentions, the Court left these matters for adjudication by the appellate authority in the appeal under Section 107, directing the appellate authority to consider the petitioner's readiness to comply, payment made, and the consequences of cancellation while passing appropriate orders strictly in accordance with law and rules within the stipulated time.The factual/contentious issue about inability to file returns and related compliance is remitted to the appellate authority for fresh consideration in the appeal; the Court did not decide these matters on merits.Final Conclusion: The writ petition challenging the cancellation of GST registration is disposed of without adjudication on merits; the petitioner is permitted to file an appeal under Section 107 of the CGST Act, 2017 within one week, and the appellate authority is directed to decide the appeal in accordance with law within four weeks, with issues regarding non filing of returns and inability to file post cancellation left for consideration by that authority. Issues:Challenge to cancellation of registration under Section 29 of the Central Goods and Services Tax Act, 2017.Analysis:The petitioner, a diet contractor supplying food to Government General Hospitals at subsidized prices, challenged the cancellation order of registration by the Goods and Services Tax Officer. The petitioner contended that the supplies were taxable at 5% under the GST Act and had been reporting and discharging tax liability since December 2018. Due to delays in receiving bills from the government, the petitioner failed to file returns for several months. The petitioner highlighted financial difficulties faced, including non-payment by hospitals despite bill acceptance. The petitioner expressed willingness to comply with tax obligations if given another chance. The government, opposing the petition, argued that the petitioner failed to respond to the show-cause notice and utilize the remedy under Section 107 of the CGST Act, hence challenging the petition's maintainability.The Court noted Section 107 of the CGST Act, allowing aggrieved parties to appeal decisions within three months. Considering the petitioner's contentions and submissions, the Court disposed of the Writ Petition, permitting the petitioner to approach the appellate authority within a week. The Court directed the appellate authority to consider any appeal filed within four weeks and pass appropriate orders in accordance with rules. The judgment emphasized the importance of following statutory procedures and availing prescribed remedies, such as the appellate process under Section 107 of the CGST Act, before seeking judicial intervention. The Court's decision aimed to uphold procedural fairness and adherence to legal frameworks in tax matters, ensuring parties exhaust administrative remedies before resorting to judicial review.In conclusion, the High Court of Andhra Pradesh addressed the challenge to the cancellation of registration under the CGST Act, emphasizing the significance of statutory appeal mechanisms. The judgment underscored the necessity for parties to exhaust administrative remedies before seeking judicial redress, promoting adherence to legal procedures and due process in tax-related disputes. The Court's decision balanced the petitioner's contentions with legal requirements, providing an opportunity for appeal while upholding the statutory framework governing tax matters.