GST registration cancellation for non filing of returns restored after notice held invalid; restoration conditional on filing pending returns

Cancellation of GST registration for non filing of returns was set aside because the show cause notice combining procedural provisions was issued mechanically and held invalid; cancellation based on that notice was quashed. The court accepted that where a notice is bad in law, writ relief is maintainable because the appellate forum cannot determine the notice's validity, and therefore the petition could proceed. Registration was restored on compassionate grounds tied to pandemic and health disruptions, subject to filing pending returns and compliance, with warning of automatic cancellation if obligations are not met.

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Issues involved:
The cancellation of registration u/s 29(2)(C) of the WBGST Act due to failure to file returns for consecutive six months; Validity of show-cause notice dated 29th November, 2021; Maintainability of writ petition in light of alternative remedy of appeal; Consideration of revocation of cancellation and restoration of registration for the benefit of the State and the petitioner's livelihood.

Validity of Show-Cause Notice:
The notice dated 29th November, 2021, combining provisions of Rule 22(1) and Rule 21A(2A) of the WBGST Rules, 2017, was issued in a mechanical manner without following the prescribed procedure. The notice was found to be bad in law as it did not adhere to the specific provisions under the WBGST Act and Rules. The failure to reply to the invalid notice was deemed inconsequential, and the cancellation based on such notice was considered legally flawed.

Maintainability of Writ Petition:
The argument raised by the department regarding the maintainability of the writ petition due to the availability of an alternative remedy of appeal was considered. However, it was noted that if a show-cause notice is found to be bad in law, challenging the action of the authorized officer in a writ jurisdiction is permissible, especially when the Appellate Authority does not have the power to decide on the validity of the notice. Precedents were cited where writ petitions were allowed even in the absence of an appeal process.

Revocation and Restoration of Registration:
Given the exceptional circumstances of the petitioner's health issues and the impact of the pandemic on business operations, a sympathetic consideration was warranted. The cancellation of registration solely based on the default in filing returns during the pandemic was deemed unjust. Therefore, the order cancelling the registration was set aside, and the registration was restored. The petitioner was directed to file pending returns and comply with statutory obligations, with a warning of automatic cancellation if returns were not filed within the specified period.

In conclusion, the writ petition was disposed of with the restoration of registration, emphasizing the need for compliance with tax obligations moving forward to avoid further issues.

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