GST registration cancellation challenged successfully with delay condoned due to COVID-19 financial impact

Gauhati HC disposed of petition challenging GST registration cancellation due to non-filing of statutory returns. Petitioner attributed default to COVID-19 financial losses and filed appeal beyond limitation period. Court held that since appeal was pending before Appellate Authority and no prejudice caused to revenue or third parties, matter need not be remanded. HC exercised inherent power to condone delay, directing Appellate Authority to decide revocation appropriately. Respondent authority directed to intimate outstanding dues till cancellation date, which petitioner must deposit if required. Petition disposed of with directions for compliance.

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Issues:
Cancellation of GST registration due to non-compliance with statutory returns during COVID-19 pandemic, appeal filed beyond limitation period, revocation of cancellation of GST registration, authority to pass orders for revocation, outstanding statutory dues, disposal of appeal by the Appellate Authority.

Analysis:
The writ petition challenged the cancellation of GST registration of the petitioner due to non-compliance with the provisions of the Central Goods and Services Tax Act, 2017 during the COVID-19 pandemic, which caused financial losses to the petitioner's tea manufacturing business. The petitioner failed to file statutory returns, leading to the cancellation of registration. Subsequently, the petitioner revived the business, filed returns up to April 2022, and attempted to apply for revocation, but it was not filed within the prescribed period. An appeal was filed under Section 107 against the cancellation, pending before the Appellate Authority. The petitioner argued that the cancellation was unjustified as returns were now filed, and the financial losses due to the pandemic were the reason for non-compliance, affecting the livelihood. The petitioner sought revocation to continue the business.

The Court considered the provisions of Rule 23(1) of the GST Rules of 2017, stating that no revocation application can be filed without furnishing returns and paying due taxes, interest, penalties, and late fees. The petitioner attributed the default to financial losses from the pandemic and filed an appeal beyond the limitation period. The Court highlighted the purpose of limitation in statutes to ensure compliance and protect third-party rights. Non-revocation of GST registration may prejudice the assessee alone, not creating rights against third parties or revenue. Revocation would facilitate revenue collection under the GST regime.

Since the appeal was pending before the Appellate Authority, the Court decided not to remand the matter but empowered the Authority to decide on revocation based on presented facts. The Court emphasized its power to condone delays and directed the Appellate Authority to hear the appeal on merits without dismissing it on limitation grounds. The respondent authority was instructed to inform the petitioner of outstanding dues, which, upon payment, would enable the Appellate Authority to proceed with the appeal and pass appropriate orders after hearing the petitioner.

In conclusion, the Court disposed of the writ petition, ordering the Appellate Authority to hear the appeal on merits after the petitioner pays outstanding dues. The Authority was directed to decide on revocation after condoning any delays, ensuring a fair hearing for the petitioner.

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