2023 (9) TMI 1002 - HC - GST

GST registration cancelled for six months' non-filing of returns; s.29 upheld despite s.50 interest demand; writ dismissed.

Cancellation of GST registration for continuous non-filing of returns was challenged on the premise that cancellation could not be ordered when tax with ... Cancellation of GST registration for continuous non-filing of returns - Payment of tax and interest does not undo cancellation for non-filing - Availability of statutory appeal against cancellation - Consideration of fresh registration application expeditiouslyCancellation of GST registration for continuous non-filing of returns - Validity of the order cancelling the petitioner's GST registration for failure to file returns for a continuous period of six months. - HELD THAT: - The Court found that the petitioner had not uploaded Form GSTR-3B returns for the period April, 2022 to December, 2022 and that Section 29 of the GST Act, 2017 contemplates cancellation of registration where returns are not filed continuously for six months. The authority issued a show cause notice, afforded opportunity of reply and personal hearing, and in the absence of any response from the petitioner lawfully passed the cancellation order. The Court held there was no error in the exercise of jurisdiction in cancelling the registration under the statutory scheme. [Paras 2, 4]The cancellation of registration was valid and upheld.Payment of tax and interest does not undo cancellation for non-filing - Whether payment of tax and interest after cancellation cures the default and mandates restoration of registration. - HELD THAT: - The Court rejected the petitioner's contention that payment of tax and interest after cancellation renders the cancellation non est. It observed that provisions for levy of interest for delayed payment and provisions for cancellation for non-filing of returns have different scope and purpose. Payment of tax and interest does not negate the statutory basis for cancellation for non-filing, and therefore cannot, by itself, oblige restoration of registration. [Paras 3]Payment of tax and interest post-cancellation does not vitiate the cancellation order or require restoration of registration.Availability of statutory appeal against cancellation - Consideration of fresh registration application expeditiously - Availability and non-availability of alternative remedies and the course open to the petitioner following cancellation. - HELD THAT: - The Court noted that the Act and Rules provide an alternative remedy of appeal against the cancellation order within the prescribed period (maximum three months from communication of the order), which the petitioner failed to avail. Having failed to file returns for six consecutive months, the authority was left with no option but to cancel the registration. The Court therefore dismissed the writ petition while directing that any fresh registration application by the petitioner shall be considered in accordance with law and expeditiously. [Paras 4, 5]The petitioner's failure to pursue the statutory appeal remedies precluded relief; writ petition dismissed but a fresh registration application may be considered expeditiously in accordance with law.Final Conclusion: Writ petition dismissed; cancellation of GST registration for non-filing (April, 2022 to December, 2022) upheld; post-cancellation payment of tax and interest does not cure the ground for cancellation; petitioner may apply for fresh registration which shall be considered in accordance with law, expeditiously. Issues involved: Impugning Exhibit P3 order of cancellation of GST registration due to non-filing of returns, seeking reliefs through writ petition, interpretation of Sections 29 and 50 of the GST Act, 2017, restoration of registration after filing returns and paying tax with interest.Issue 1: Cancellation of GST registrationThe petitioner, a registered dealer under the GST Act, 2017, failed to upload returns in form 3B for a period of nine months, leading to a show cause notice and eventual cancellation of registration. The cancellation was based on the authority's power under Section 29 of the GST Act, 2017, which allows for cancellation if returns are not filed continuously for six months. The petitioner did not respond to the show cause notice nor filed a return, resulting in the cancellation of registration with effect from a specified date.Issue 2: Relief sought through writ petitionThe writ petition sought the quashing of the Exhibit P3 order cancelling registration, removal of conditions hindering return uploads, and keeping the GST site open for trading activities. However, the court found no error in the authority's decision to cancel registration due to non-compliance with filing returns for the statutory period. The court emphasized the availability of an appeal remedy within three months of the cancellation order, which the petitioner did not utilize.Issue 3: Restoration of registration after filing returns and paying tax with interestThe petitioner argued that filing returns and paying tax with interest post-cancellation should lead to restoration of registration. However, the court clarified that the provisions for cancellation of registration and payment of tax with interest serve different purposes and do not contradict each other. The court upheld the cancellation of registration due to the petitioner's failure to comply with return filing requirements for six consecutive months.Conclusion:The court dismissed the writ petition, stating that the authority's decision to cancel registration was lawful. The petitioner was advised to apply for fresh registration if desired, with assurance of expedited consideration. The court rejected the petitioner's claim that the GST software was not compliant with the law, noting that the portal's functionality was consistent with national tax filing practices.