2023 (11) TMI 875 - HC - GST

Taxpayer Wins GSTIN Restoration After Proving Auditor's Filing Errors Were Not Deliberate Misconduct

HC found that GSTIN registration cancellation was unjustified, primarily due to auditor's errors in filing NIL returns rather than petitioner's ... Cancellation of GST Registration - Restoration of GSTIN - Filing of GSTR-1 and GSTR-3B - Filing of GSTR-10 as acceptance of cancellation - Negligence of statutory agent/auditor in filing returns - Goods Transport Agency and Reverse Charge MechanismCancellation of GST Registration - Filing of GSTR-1 and GSTR-3B - Negligence of statutory agent/auditor in filing returns - Validity of cancellation of the petitioner's GSTIN in view of NIL returns filed by the auditor despite actual outward supplies - HELD THAT: - The Court found on the admitted material that the petitioner, an owner-cum-driver carrying on transport business under the trade name, had engaged an auditor and provided portal credentials. The auditor, without taking proper instructions, repeatedly filed NIL GSTR-1 and GSTR-3B instead of reflecting the petitioner's actual outward supplies; on that mistaken premise the department cancelled the GSTIN. The court accepted the petitioner's account that the error resulted from the auditor's conduct and that genuine transactions had been effected. Having regard to these findings, the cancellation was set aside and restoration ordered. The determinative reasoning is that the cancellation proceeded on an incorrect factual premise generated by the auditor's negligent filings, and therefore cannot stand. [Paras 7, 8, 9]Impugned cancellation of GSTIN is set aside and the GSTIN registration No.33AQRPD0201D1ZO is directed to be restored.Filing of GSTR-10 as acceptance of cancellation - Restoration of GSTIN - Effect of filing of GSTR-10 after cancellation and the appropriate remedy for restoration - HELD THAT: - The respondent relied on the fact that GSTR-10 had been filed and accepted by the department, contending that the petitioner had thereby accepted cancellation. The Court, however, concluded that the GSTR-10 was filed by the auditor after knowledge of cancellation and that such filing did not reflect a voluntary or informed acceptance by the petitioner. In consequence, the Court directed a remedial procedure: the petitioner must file a formal application for restoration within one week of receipt of the order, and the department shall revoke the cancellation within two weeks thereafter. The order treats the GSTR-10 filing as not precluding restoration where the cancellation itself is found to be occasioned by the auditor's error. [Paras 8, 9, 10, 11]Petitioner to file an application for restoration within one week; respondent to revoke the cancellation within two weeks thereafter.Final Conclusion: The writ petition succeeds. The cancellation of the petitioner's GSTIN is set aside on the ground that the auditor's negligent filing of NIL returns (and subsequent filing of GSTR-10) led to cancellation; the petitioner is directed to apply for restoration within one week and the department to revoke the cancellation within two weeks. No costs. Issues involved: Challenge to cancellation of GSTIN registration due to filing of NIL returns by the auditor instead of showing actual outwards supplies, petitioner's inability to recover invoice amount due to cancelled GSTIN.Summary:Challenge to Cancellation of GSTIN Registration:The petitioner, an illiterate owner-cum-driver of a lorry, challenged the cancellation of GSTIN registration by the respondent due to continuous filing of NIL returns by the auditor instead of showing actual outwards supplies. The petitioner had engaged an auditor for GST returns filing, who filed GSTR-10 after cancellation without restoring the GSTIN. The High Court observed that the cancellation was based on the auditor's actions, not the petitioner's genuine transactions. The Court set aside the cancellation and directed restoration of the GSTIN registration.Inability to Recover Invoice Amount:Despite successfully carrying on the transport business and raising invoices, the petitioner could not recover the invoice amount due to the cancelled GSTIN. The respondent argued that by filing GSTR-10, the petitioner accepted the cancellation and should not have raised invoices. However, the Court found the petitioner's reason for raising invoices genuine, attributing the error to the auditor. The Court directed the petitioner to file a formal application for restoration of GSTIN registration, which the respondent was ordered to revoke within two weeks of application.The Writ Petition challenging the cancellation of GSTIN registration was disposed of in favor of the petitioner, with directions for restoration.