2025 (7) TMI 1250 - HC - GST

Fresh GST registration application rejection set aside due to unreasoned order and procedural lapses

The Patna HC allowed a writ petition challenging rejection of fresh GST registration application. The petitioner's previous registration was cancelled, ... Cancellation of GST registration of petitioner - rejection of reasons without assigning any reasons - attempt to evade tax liability on the part of the petitioner - HELD THAT:- On perusal of the records while it appears to this Court that the petitioner had a remedy available for revocation of the order of cancellation of his previous registration and he had a remedy of appeal also but he chose not to avail such remedies, instead he filed an application for fresh registration, in such circumstance, a question would arise for consideration as to whether a fresh application for registration is barred by the statute. On a bare reading of the circular, it is crystal clear that a fresh application for registration is not barred but what is required to be done by the Proper Officer is to record a finding that the application for revocation of cancellation of registration has not been filed and the conditions specified in clauses (b) and (c) of sub-section (2) of Section 29 of the Central Goods and Services Tax Act (CGST Act) are still continuing. On perusal of Annexure ‘P/6’ to the writ application, it would appear that the same is a completely unreasoned order. No finding in terms of the requirement of the circular has been recorded by the Proper Officer. In fact, the reason for rejection of the fresh application of the petitioner as disclosed in the counter affidavit was not the issue mentioned in the notice seeking additional information/clarification/document from the petitioner. In this regard, Annexure ‘P/5’ would show that there was no reference of Section 29(2)(b) of the CGST/BGST Act, 2017. In fact, Annexure ‘P/6’ is an unreasoned order, hence, it is liable to be set aside. This Court, therefore, sets aside the order of rejection of the application for registration (Annexure ‘P/6’) and remits the matter to the Deputy Commissioner of State Tax, Madhubani (Respondent No. 7) to give a fresh consideration to the application of the petitioner for registration - Application allowed by way of remand. ISSUES: Whether an application for fresh GST registration can be rejected without assigning reasons, particularly when the applicant alleges technical impossibility in filing returns.Whether the rejection of fresh GST registration is barred by statute when the earlier registration was cancelled and no revocation application was filed.Whether the proper officer is required to record specific findings under CBIC Circular No. 95/14/2019-GST dated 28.03.2019 before rejecting a fresh GST registration application.Whether an unreasoned order rejecting GST registration application is liable to be set aside.Whether the petitioner is entitled to file GST returns only up to the period allowed by the GST portal due to technical limitations. RULINGS / HOLDINGS: The Court held that the fresh application for GST registration is not barred by statute; however, the proper officer must ascertain if the application for revocation of cancellation was filed and whether the conditions under clauses (b) and (c) of sub-section (2) of Section 29 of the CGST Act are still continuing, as per the CBIC Circular No. 95/14/2019-GST.The rejection order (Annexure 'P/6') was found to be a 'completely unreasoned order' without any recorded findings as required by the circular, and therefore, it is liable to be set aside.The petitioner's grievance regarding the inability to file returns beyond February 2023 due to 'technical limitations on the website of GST' was acknowledged, and the Court recognized that no further returns could be made beyond what the portal allowed.The Court set aside the order of rejection and remitted the matter for fresh consideration, directing the proper officer to provide the petitioner an 'appropriate opportunity to comply with the requirements' before passing any order. RATIONALE: The Court relied on the statutory framework under Section 29(2) of the Central Goods and Services Tax Act, which authorizes cancellation of registration for non-filing of returns and other grounds.The Court applied the CBIC Circular No. 95/14/2019-GST dated 28.03.2019, which requires proper officers to verify if revocation applications have been filed and whether the conditions leading to cancellation persist before rejecting fresh registration applications.The Court emphasized the necessity of reasoned orders recording findings as mandated by the circular and statutory provisions, rejecting the validity of unreasoned orders.The Court recognized the petitioner's inability to comply due to 'technical limitations' on the GST portal, reflecting a practical consideration in the application of statutory compliance requirements.No dissent or doctrinal shift was indicated; the judgment adhered to established statutory interpretation and procedural fairness principles.