2023 (2) TMI 540 - HC - GST

GST registration cancellation overturned due to procedural unfairness despite delayed return filing

M/s. Rakesh Enterprises Versus The Principal Commissioner Central Goods And Services Tax & Ors.

Delhi HC allowed petition challenging cancellation of GST registration for default in filing returns beyond six months. Court found the cancellation order ... Cancellation of petiitoner's registration - default in filing the returns for more than six months - HELD THAT:- Although the impugned order dated 28.12.2020 refers to the petitioner’s response to the Show Cause Notice, it does not indicate as to the contents thereof or reflects any discussion in respect of the petitioner’s explanation - there are merit in the petitioner’s contention that the impugned order cannot be sustained. It is also relevant to note that there is no dispute that the petitioner has filed its returns, albeit belatedly, and has also paid the tax and penalty in accordance with the Act. This Court may also note that the Madras High Court in TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST), THE ASSISTANT COMMISSIONER (CIRCLE), SALEM BAZAAR [2022 (2) TMI 933 - MADRAS HIGH COURT] had also observed that it is not the intention of the authorities to debar and de-recognise assessees from coming back into the Goods and Service Tax (GST) fold. This was in the context of petitions where GST registrations of dealers had been cancelled and they had not availed of the alternate remedy seeking revocation of the cancellation orders within the time prescribed - it was held by Madras HC that Since, no useful will be served by not allowing persons like the petitioners to revive their registration and integrate them back into the main stream, the impugned orders are liable to be quashed and with few safeguards. It is not necessary for this Court to examine whether the time period as stipulated under Section 30 of the Act is mandatory in this case. This is because it is apparent that the impugned order dated 28.12.2020, cancelling the petitioner’s registration is unsustainable as it does not consider the petitioner’s response to the Show Cause Notice. The respondents are directed to restore the petitioner’s Registration - petition allowed. Issues:Impugning order cancelling registration under Central Goods and Services Tax Act, 2017 due to default in filing returns for over six months.Analysis:1. The petitioner challenged the order canceling their registration under the Central Goods and Services Tax Act, 2017, citing default in filing returns for more than six months. The impugned order was based on a Show Cause Notice dated 15.12.2020.2. The petitioner responded to the Show Cause Notice with a reply dated 24.12.2020, although the copy of the reply was not readily available as the advocate did not provide it.3. The respondent contended that the petitioner did not submit any response to the Show Cause Notice, attributing a possible technical glitch to the reference to the reply dated 24.12.2020.4. The counter affidavit filed by the respondent was inconsistent, acknowledging in one paragraph that no response was submitted while not refuting the petitioner's claim of having responded in another paragraph.5. The Court noted that the order dated 28.12.2020 explicitly referenced the petitioner's reply dated 24.12.2020, indicating that a response was indeed submitted, and found merit in the petitioner's argument that the impugned order could not be sustained.6. The Court highlighted that the impugned order did not discuss the contents of the petitioner's response to the Show Cause Notice, further supporting the decision to set aside the order.7. It was acknowledged that the petitioner had eventually filed their returns and paid the tax and penalty as required by the Act, emphasizing the compliance post the cancellation order.8. Citing a judgment by the Madras High Court, the intention of the authorities was clarified not to debar assessees from returning to the GST fold, emphasizing the facilitation rather than exclusion of taxpayers.9. The Court concluded by setting aside the impugned order dated 28.12.2020 and directed the restoration of the petitioner's registration, emphasizing the need to integrate them back into the GST regime while ensuring compliance with safeguards against abuse or default.10. The judgment did not delve into the mandatory nature of the time period stipulated under Section 30 of the Act, as the cancellation order was deemed unsustainable due to the lack of consideration for the petitioner's response to the Show Cause Notice.