2024 (5) TMI 1090 - HC - GST

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 ... Maintainability of petition - appealable order - Cancellation of registration of the petitioner - non-filing of return for consecutive six months - HELD THAT:- In the instant case, the petitioner has not preferred any appeal. This allows the revenue to raise the point of alternative remedy for which the writ petition is not maintainable. It is also correct that during March, 2020 and 28th February, 2022, the situation in the country owing to pandemic was not normal. The business entities have suffered commercial loss during this period for lack of business, at the same time filing of the returns have become irregular owing to prevailing condition at the relevant point of time. The petitioner’s default took place during the pandemic and, as such, a sympathetic consideration is required to be given keeping in mind that by retaining the order of cancellation, the petitioner will be deprived of carrying on his business which will ultimately result into the loss to the Government exchequer. The justice will be sub-served, if, it is directed that the order impugned dated 25th January, 2022 be set aside particularly when the default in filing the return for six consecutive months being the only ground for cancellation. The order dated 25th January, 2022 cancelling the petitioner’s registration is set aside and the registration is restored back to its original position. The department is directed to permit the petitioner to file the return for the period from December, 2020 till date. If the petitioner fails to file the return within a period of three weeks from date, the restoration of the registration will be again automatically cancelled. The petition is disposed off. 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.