2024 (6) TMI 895 - HC - GST

GST registration cancelled for missed returns u/s39; revocation refusal overturned despite time-bar appeal u/s107

Cancellation of GST registration for continuous non-filing of returns under s.39 CGST Act and consequent refusal to revoke were challenged after the ... Cancellation of GST registration for non-filing of returns - Restoration of registration on compliance - Filing pending returns and payment of tax, interest, fine and penalty as condition for restoration - Practical approach to restoration of registration - Setting aside orders rejecting revocation and appellate order - Effect of absence of affidavit-in-oppositionCancellation of GST registration for non-filing of returns - Practical approach to restoration of registration - Order cancelling the petitioner's registration dated 27th March, 2023 set aside. - HELD THAT: - The Court found that the registration was cancelled on the ground of non-filing of returns but there was no allegation that the petitioner adopted fraudulent means to evade tax. The petitioner filed pending returns after issuance of the showcause notice and the cancellation would be counterproductive as it would impede the petitioner's ability to carry on business and thereby affect revenue recovery. Having regard to these facts and the Division Bench direction in Subhankar Golder, the Court adopted a pragmatic approach and set aside the cancellation order while conditioning restoration on compliance by the petitioner. [Paras 13, 16]Order dated 27th March, 2023 cancelling registration is set aside subject to the conditions specified by the Court.Restoration of registration on compliance - Filing pending returns and payment of tax, interest, fine and penalty as condition for restoration - Registration to be restored by the jurisdictional officer if the petitioner files all pending returns and pays requisite tax, interest, fine and penalty within the stipulated time. - HELD THAT: - The Court directed that if the petitioner complies with filing of returns for the entire period of default and pays the requisite amounts, the jurisdictional officer shall restore registration. The petitioner was given a clear timeline of four weeks from receipt of the order's service copy for compliance. The respondents were directed to activate the portal within one week to enable compliance. Failure to comply within the timeline would result in the writ petition standing automatically dismissed and the benefit of the order not accruing to the petitioner. [Paras 16, 17, 18]If the petitioner complies within four weeks and the portal is activated as directed, the jurisdictional officer shall restore registration; failure to comply will result in dismissal of the writ petition.Setting aside orders rejecting revocation and appellate order - The orders rejecting the petitioner's application for revocation and the appellate authority's order are set aside. - HELD THAT: - As a consequence of setting aside the cancellation and directing conditional restoration, the Court also set aside the order dated 11th May, 2023 rejecting revocation of cancellation and the appellate order dated 26th February, 2024. The appellate authority's dismissal on limitation grounds was noted, but the appellate order was nevertheless set aside in light of the directions given for restoration upon compliance. [Paras 19]Order dated 11th May, 2023 and the appellate order dated 26th February, 2024 stand set aside.Effect of absence of affidavit-in-opposition - Absence of an affidavit-in-opposition results in the allegations in the writ petition being deemed not admitted by the respondents. - HELD THAT: - The Court recorded that no affidavit-in-opposition was called for and, accordingly, treated the allegations in the writ petition as not having been admitted by the respondents. This observation informs the procedural posture but did not alter the conditional relief granted. [Paras 20]Allegations in the writ petition are deemed not to have been admitted by the respondents due to absence of affidavit-in-opposition.Final Conclusion: The cancellation of the petitioner's GST registration is set aside; registration will be restored by the jurisdictional officer if the petitioner, within four weeks of service of this order, files all pending returns and pays the requisite tax, interest, fine and penalty (with the portal to be activated within one week); otherwise the writ petition will stand dismissed; the orders rejecting revocation and the appellate order are set aside; no costs. Issues involved: Challenge to the cancellation of registration under the Central/West Bengal Goods and Services Tax Act, 2017.Summary:The petitioner, a small businessman and works contractor, challenged the cancellation of registration due to defaults in filing returns during the Covid period. The petitioner filed returns after receiving a show cause notice, but the registration was still cancelled. An application for revocation was rejected for not responding to a further show cause. The appeal was dismissed as barred by limitation, but the appellate authority upheld the cancellation. The petitioner sought further opportunity to comply with the Act. The respondents argued lack of compliance and bona fide conduct by the petitioner.The Court noted the cancellation was due to non-filing of returns, not tax evasion. Considering the impact on business and tax recovery, the Court directed pragmatic view and restoration of registration upon compliance with conditions. The petitioner must file returns for the default period and pay taxes, interest, fine, and penalty. Failure to comply within 4 weeks will result in dismissal of the petition. The respondents were directed to activate the portal for compliance. The orders rejecting revocation and appellate authority's decision were set aside. No affidavit-in-opposition was called for, and the petition was disposed of without costs.The judgment emphasized the importance of compliance with tax laws while balancing the interests of the taxpayer to carry on business. The Court's decision aimed to provide a chance for the petitioner to rectify the defaults and continue business operations within the legal framework.