GST registration cancellation quashed: failure to pay within three months not a statutory ground under Section 29 CGST Act HC set aside cancellation of the taxpayer's GST registration. The court held the sole ground in the SCN-failure to pay tax, interest or penalty within ...
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GST registration cancellation quashed: failure to pay within three months not a statutory ground under Section 29 CGST Act
HC set aside cancellation of the taxpayer's GST registration. The court held the sole ground in the SCN-failure to pay tax, interest or penalty within three months-is not a statutory ground under Section 29 CGST Act for cancellation. The impugned order showed no amount determined as payable and was issued in breach of natural justice because the SCN summoned a personal hearing without specifying date or time. The cancellation order was quashed and the petition disposed.
Issues: Cancellation of GST registration based on non-payment of dues for three months, violation of principles of natural justice, applicability of Section 29 of the CGST Act, applicability of Rule 21 of the CGST Rules.
Analysis: The petitioner challenged the cancellation of their GST registration with retrospective effect from 01.07.2017 due to non-payment of dues beyond three months, as stated in the Show Cause Notice (SCN) dated 03.09.2021. The SCN did not specify a date for a personal hearing, and the registration was suspended from 03.09.2021. The impugned order did not provide a reason for the cancellation but referred to the SCN. The central issue was whether the cancellation was justified as per the reasons in the SCN.
The Court noted that the reason for cancellation in the SCN did not align with the grounds specified in Section 29 of the CGST Act, which outlines valid reasons for cancellation. Section 29(2) lists specific contraventions that warrant cancellation, none of which include non-payment of dues for three months. Additionally, Rule 21 of the CGST Rules provides grounds for cancellation, none of which pertain to non-payment within a specified period.
The impugned order lacked clarity on the reason for cancellation and displayed a tabular statement indicating no payable amount by the petitioner. Moreover, the order violated principles of natural justice by not specifying a date for a personal hearing, depriving the petitioner of an opportunity to be heard. Consequently, the Court set aside the impugned order and directed the restoration of the petitioner's GST registration immediately.
The Court clarified that the restoration does not prevent the respondents from pursuing recovery of dues or addressing statutory non-compliances through lawful means. The petition was disposed of accordingly, and any pending applications were also resolved.
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