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of <h1>GST registration cancellation valid under Section 29(2)(c) but can be restored on filing returns and paying dues as per Rule 22(4)</h1> <h3>D.D. CONSTRUCTION Versus THE UNION OF INDIA AND 3 ORS., THE PRINCIPAL COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, THE ASSISTANT COMMISSIONER CENTRAL GOODS AND SERVICE TAX GUWAHATI, THE SUPERINTENDENT CENTRAL GOODS AND SERVICES TAX</h3> D.D. CONSTRUCTION Versus THE UNION OF INDIA AND 3 ORS., THE PRINCIPAL COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, THE ASSISTANT COMMISSIONER CENTRAL ... 1. ISSUES PRESENTED AND CONSIDERED Whether the cancellation of GST registration under Section 29(2)(c) of the CGST Act, 2017 is valid when returns were not filed for a continuous period of six months. Whether the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 permits restoration of GST registration upon submission of pending returns and payment of dues after cancellation. The scope of authority and jurisdiction of the proper officer to drop cancellation proceedings and restore registration upon compliance by the assessee. The procedural requirements and time limits applicable for filing revocation applications against cancellation of GST registration. The legal consequences and civil implications arising from cancellation of GST registration under the CGST Act, 2017. The applicability of statutory periods under Section 73(10) and Section 44 of the CGST Act for computation of limitation post-judgment. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of GST Registration Cancellation under Section 29(2)(c) of the CGST Act, 2017 Legal Framework and Precedents: Section 29(2)(c) empowers a proper officer to cancel the GST registration of a person who has not furnished returns for a continuous period of six months or more. Rule 22 of the CGST Rules, 2017 prescribes the procedure for such cancellation, including issuance of show cause notice and opportunity for hearing. Court's Interpretation and Reasoning: The Court recognized that the cancellation of registration was effected in compliance with Section 29(2)(c) due to non-filing of returns for six consecutive months. The issuance of a show cause notice and personal hearing opportunity was noted as per procedural requirements. Key Evidence and Findings: The petitioner failed to submit GST returns for six or more months, leading to issuance of show cause notice and subsequent cancellation order dated 20.02.2024 by the Superintendent. Application of Law to Facts: The cancellation was legally valid as per the statutory provisions since the petitioner did not comply with filing requirements for the stipulated period. Treatment of Competing Arguments: Although the petitioner claimed inability to file returns due to reasons beyond control, the statutory mandate under Section 29(2)(c) was clear and mandatory for cancellation upon continuous non-filing. Conclusion: The cancellation of GST registration under Section 29(2)(c) was valid and procedurally compliant. Issue 2: Interpretation and Application of Proviso to Sub-rule (4) of Rule 22 of the CGST Rules, 2017 Regarding Restoration of Registration Legal Framework and Precedents: Sub-rule (4) of Rule 22 provides that if the reply to the show cause notice is satisfactory, the proceedings shall be dropped and order passed in Form GST REG-20. The proviso specifically allows dropping proceedings if the person furnishes all pending returns and makes full payment of tax dues, interest, and late fees. Court's Interpretation and Reasoning: The Court emphasized that the proviso grants the proper officer discretionary authority to drop cancellation proceedings if the assessee complies with all pending return filings and dues payment, even after cancellation. Key Evidence and Findings: The petitioner expressed readiness and willingness to comply with all formalities under the proviso but was unable to file revocation application within the prescribed time. Application of Law to Facts: The Court held that the petitioner is entitled to approach the proper officer within a reasonable timeframe to furnish pending returns and pay dues to seek restoration. Treatment of Competing Arguments: The respondent did not dispute the applicability of the proviso but relied on lapse of time for revocation application. The Court balanced this by permitting an opportunity to comply and restore registration. Conclusion: The proviso to sub-rule (4) allows restoration of registration upon compliance, and the proper officer has jurisdiction to drop proceedings accordingly. Issue 3: Authority and Jurisdiction of Proper Officer to Drop Proceedings and Restore Registration Legal Framework and Precedents: Rule 22(4) and its proviso empower the proper officer to drop cancellation proceedings and pass an order in Form GST REG-20 upon satisfactory compliance by the assessee. Court's Interpretation and Reasoning: The Court affirmed that the proper officer has the authority and jurisdiction to consider an application for restoration if the assessee submits all pending returns and pays all dues, including interest and late fees. Key Evidence and Findings: The Court noted that cancellation entails serious civil consequences, thus restoration must be facilitated if statutory conditions are met. Application of Law to Facts: The petitioner was directed to approach the proper officer within two months to seek restoration, and the officer was mandated to consider the application expeditiously and in accordance with law. Treatment of Competing Arguments: The Court did not accept the argument that time lapse barred restoration, emphasizing the discretionary power of the officer under Rule 22(4) proviso. Conclusion: The proper officer's authority to drop proceedings and restore registration upon compliance is upheld and must be exercised fairly. Issue 4: Procedural Requirements and Time Limits for Filing Revocation Applications Legal Framework and Precedents: The CGST Rules prescribe specific time limits for filing revocation applications against cancellation orders. Failure to file within prescribed time bars the application. Court's Interpretation and Reasoning: The petitioner's revocation application could not be filed due to expiry of the statutory time limit. However, the Court provided relief by allowing restoration through compliance under the proviso to Rule 22(4). Key Evidence and Findings: The petitioner missed the statutory deadline but expressed willingness to comply fully. Application of Law to Facts: The Court circumvented the strict time bar by relying on the discretionary power of the proper officer to drop proceedings upon compliance. Treatment of Competing Arguments: The respondent relied on procedural bar, but the Court prioritized substantive compliance and restoration over procedural technicalities. Conclusion: Although statutory time limits for revocation applications are binding, restoration may still be sought through compliance under Rule 22(4) proviso. Issue 5: Civil Consequences of Cancellation of GST Registration Legal Framework and Precedents: Cancellation of GST registration entails serious civil consequences including inability to carry on taxable supply, liability to pay arrears, penalties, interest, and late fees. Court's Interpretation and Reasoning: The Court acknowledged the gravity of cancellation and the need for procedural safeguards to allow restoration where possible. Key Evidence and Findings: The petitioner faced cancellation due to non-filing but was willing to comply with all dues. Application of Law to Facts: The Court balanced the enforcement of statutory provisions with equitable considerations to mitigate harsh consequences. Treatment of Competing Arguments: The Court did not find merit in arguments seeking exemption from dues or penalties but emphasized restoration upon full compliance. Conclusion: Cancellation has serious consequences, but restoration is permissible upon full compliance with tax dues and procedural requirements. Issue 6: Computation of Limitation Periods under Sections 73(10) and 44 of the CGST Act Post-Judgment Legal Framework and Precedents: Section 73(10) governs limitation for recovery of tax not paid, while Section 44 relates to annual return filing and assessment for the relevant financial year. Court's Interpretation and Reasoning: The Court clarified that the limitation period under Section 73(10) shall be computed from the date of this judgment, except for the financial year 2024-25, where Section 44 applies. Key Evidence and Findings: The petitioner's liability for arrears, penalty, interest, and late fees remains subject to these statutory limitation periods. Application of Law to Facts: This clarification ensures clarity on computation of limitation for dues recovery following restoration. Treatment of Competing Arguments: No competing arguments on limitation computation were noted. Conclusion: Limitation for recovery of tax dues shall be computed from the date of judgment per Sections 73(10) and 44 as applicable.
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