2024 (3) TMI 1161 - HC - GST

Cancellation of GST registration of the petitioner - rejection has been made primarily on the ground that the petitioner has failed to file their returns for more than six (06) months continuously - HELD THAT - It is necessary to appreciate the fact that the show cause notice was that of December 2020. Everybody knows that since March 2020 onwards it was Covid pandemic that ripped through the entire country bringing the entire commercial and industrial establishments to a standstill or at least remaining closed for a major part of that period. The business of these establishments including that of the petitioner must have definitely been affected - If the default on the part of the petitioner is only so far as non-furnishing of the returns we are of the considered opinion that subject to the petitioner making good the default the said GST registration of the petitioner would get restored which would enable the petitioner to carry on his business and which would also generate GST revenue to the respondent authorities as well. Learned counsel for the petitioner has also undertaken to make good the necessary default so far as non-furnishing of the GST returns are concerned along with late fees and penalty that would be applicable. The present Writ Petition stands allowed directing the petitioner to immediately appear before the respondent authorities by 12.03.2024 and upon furnishing the entire GST returns up till date which they have not yet filed along with requisite late fees and penalty if any the respondent authorities shall forthwith restore the GST registration of the petitioner without any further scrutiny so far as the default of non-payment of GST returns till now is concerned and the same is a onetime measure. Petition allowed.

Summary

Issues:
The challenge in the present Writ Petition is to the order dated 18.04.2023 passed by respondent No. 3/The Deputy State Tax Officer cancelling the GST registration of the petitioner due to failure to file returns for more than six months continuously.

Details:
The petitioner, a Public Sector Unit jointly promoted by various entities, provides technical consultancy services and implements welfare programs. The petitioner, registered under GST, faced challenges in filing returns due to the Covid pandemic, attrition of employees, and change of management. Adhoc amounts were paid towards CGST/SGST for different financial years.

The petitioner, upon receiving a show cause notice on 14.01.2023, replied promptly. However, the registration was cancelled without further inquiry or opportunity for a hearing. The petitioner expressed readiness to rectify the default, pay fines, and penalties to avoid irreparable loss.

The Standing Counsel for Commercial Taxes argued that the cancellation was justified as the petitioner failed to furnish returns for over six months despite the show cause notice. The cancellation was deemed necessary due to non-compliance.

Considering the impact of the Covid pandemic on businesses, the court referred to a Delhi High Court decision emphasizing cautious exercise of cancellation of GST registration. A Madras High Court decision outlined conditions for restoration of registration in similar cases, emphasizing the need for scrutiny and approval of tax payments and credit utilization.

In light of the judicial precedents and the petitioner's willingness to rectify the default, the court allowed the Writ Petition. The petitioner was directed to file all pending GST returns with late fees and penalties by a specified date. Upon compliance, the GST registration would be restored without further scrutiny, as a one-time measure.

The Writ Petition was allowed with no costs, and any pending miscellaneous petitions were closed accordingly.