2022 (12) TMI 1041 - HC - GST

Late Fees Invalidated: GST Dealer Wins Challenge Against Incorrect Registration Cancellation Under Section 47

M/s. Modicum Enterprise (OPC) Private Limited. Versus Deputy Commissioner of State Tax/Assistant Commissioner of State Tax, Shibpur Charge & Ors.

HC ruled that late fees cannot be imposed on a registered dealer whose registration was incorrectly cancelled. The court found the demand for late fees ... Cancellation of GST registration of petitioner - it is alleged that the appellant was a non-existing dealer - demand of late fee - HELD THAT:- Admittedly, the provision deals with a person, who fails to furnish the returns either under Section 39 or Section 45 or Section 44. In the instant case, the revenue does not state that the appellant failed to furnish its return within the due date. The reason for non-furnishing the return is cancellation of the registration on the ground that the appellant is a non-existing dealer. This order was set aside by the appellate authority holding that the order was passed on a factually incorrect premise. If that be so, the appellant cannot be penalised by demanding late fee. In the facts and circumstances of the case, Section 47 does not stand attracted. The demand of late fee from the appellant @ Rs.5,000/- per return is without jurisdiction and not tenable in the eye of law. It is pointed out by the learned Advocate appearing for the official respondents that unless appropriate direction is given to the concerned respondent, the appellant will not be able to electronically file its return. In the light of the above, the following directions are issued - Petition disposed off. Issues:1. Appeal against the order declining interim relief.2. Demand of late fee under Section 47 of the Central Goods and Services Tax Act, 2017.Analysis:1. The appeal was filed against an order declining interim relief to the appellant, who was a registered dealer under the Central Goods and Services Tax Act, 2017. The registration was initially cancelled on the ground that the appellant was a non-existing dealer. However, the appeal was allowed by the Senior Joint Commissioner of State Tax, Howrah Circle, who found the ground for cancellation to be incorrect. Consequently, the registration was restored. The issue arose when the appellant was asked to pay a late fee of Rs.5,000 per return for attempting to file returns under Section 47 of the Act.2. Section 47 of the Act deals with the levy of late fees for failure to furnish returns by the due date. The court analyzed the provisions of Section 47(1) and (2) which specify the late fee amounts for different situations. The court noted that the late fee can be demanded from a registered person who fails to furnish returns under specific sections. In this case, the revenue did not claim that the appellant failed to furnish returns within the due date. The reason for non-furnishing the return was the initial cancellation of registration, which was later found to be based on a factually incorrect premise by the appellate authority.3. The court held that since the cancellation of registration was set aside due to factual inaccuracies, the appellant could not be penalized by demanding late fees. Therefore, the demand for late fees from the appellant was deemed without jurisdiction and not legally sustainable. The court issued directions restraining the respondents from demanding any late fee from the appellant for filing returns. Additionally, the court directed the nodal officer to assist the appellant in filing returns without the payment of late fees within a specified timeframe.4. The judgment concluded by emphasizing that the respondent should not initiate fresh proceedings for cancellation of registration based on non-filing of returns. The court disposed of the appeal and related applications without any order as to costs, instructing the parties to be provided with a certified copy of the order promptly upon compliance with legal formalities.