2025 (1) TMI 402 - HC - GST

Taxpayer's GST Registration Restored After Health-Related Non-Compliance, Conditional Filing and Tax Payment Mandated

The SC examined a GST registration cancellation case involving a taxpayer's non-filing of returns due to hospitalization. The court found the cancellation ... Cancellation of GST registration of the petitioner - non-filing of returns for a continuous period of six months - HELD THAT:- Admittedly, the GST registration of the petitioner was cancelled due to non-compliance in filing returns, on account of the health condition of the Petitioner. Furthermore, the time limit for filing a statutory appeal against the cancellation order had also expired, and the petitioner claims that they were unaware of the notices and communications sent through the GST Portal. Therefore, this Court is of the view that the reason provided by the petitioner for non-compliance with the relevant provisions of the Act within the stipulated time appears to be genuine. The GST registration is restored subject to and conditional upon fulfilling the conditions imposed - petition disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:Whether the cancellation of the GST registration of the petitioner due to non-filing of returns for six months was justified.Whether the petitioner had a valid reason for failing to respond to the show cause notice and the subsequent cancellation order.Whether the petitioner is entitled to restoration of the GST registration, and under what conditions this restoration should occur.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Justification for Cancellation of GST RegistrationRelevant Legal Framework and Precedents: The cancellation was based on the non-filing of GST returns for a continuous period of six months, as stipulated under the GST Act and Rules.Court's Interpretation and Reasoning: The court acknowledged the statutory requirement for filing returns and the respondent's authority to cancel registration due to non-compliance. However, it considered the petitioner's health condition as a mitigating factor.Key Evidence and Findings: The petitioner was hospitalized due to a heart ailment and was unaware of the notices uploaded on the GST portal.Application of Law to Facts: The court found the petitioner's health condition to be a genuine reason for non-compliance, which justified reconsideration of the cancellation.Treatment of Competing Arguments: The respondent argued that the cancellation was due to non-compliance, while the petitioner cited health issues as the reason for non-filing. The court balanced these arguments by considering the petitioner's circumstances.Conclusions: The court concluded that the cancellation was procedurally correct but warranted reconsideration due to the petitioner's health issues.Issue 2: Validity of Petitioner's Reason for Non-ResponseRelevant Legal Framework and Precedents: The requirement to respond to show cause notices is a procedural obligation under GST regulations.Court's Interpretation and Reasoning: The court accepted the petitioner's explanation of being unaware of the notices due to hospitalization as a valid reason for non-response.Key Evidence and Findings: The petitioner provided evidence of hospitalization and recovery timeline, which the court found credible.Application of Law to Facts: The court applied the principle of fairness, considering the petitioner's health as a valid impediment to compliance.Treatment of Competing Arguments: The respondent's argument focused on procedural compliance, while the petitioner highlighted the exceptional circumstance of health issues.Conclusions: The court concluded that the petitioner had a legitimate reason for not responding to the notices.Issue 3: Conditions for Restoration of GST RegistrationRelevant Legal Framework and Precedents: Restoration of registration is contingent upon compliance with statutory requirements and payment of dues.Court's Interpretation and Reasoning: The court outlined specific conditions for restoration, emphasizing compliance and payment of outstanding dues.Key Evidence and Findings: The court considered the petitioner's undertaking to file returns and pay taxes as a basis for conditional restoration.Application of Law to Facts: The court applied the law by setting conditions for restoration, ensuring compliance with GST regulations.Treatment of Competing Arguments: The petitioner sought restoration, while the respondent emphasized the need for compliance and payment of dues.Conclusions: The court concluded that restoration should be granted subject to specified conditions to ensure compliance.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: 'The reason provided by the petitioner for non-compliance with the relevant provisions of the Act within the stipulated time appears to be genuine.'Core Principles Established: The court established that health issues can be a valid reason for non-compliance with procedural requirements, warranting reconsideration of adverse administrative actions.Final Determinations on Each Issue: The court determined that the cancellation of GST registration was procedurally correct but warranted reconsideration. The petitioner was granted restoration of registration subject to compliance with specified conditions, including filing returns and paying outstanding taxes.The judgment reflects a balanced approach, considering both procedural compliance and exceptional circumstances, ensuring fairness while upholding statutory obligations.