2025 (6) TMI 99 - HC - GST

Cancellation of GST registration of the petitioner - non-filing of GST returns for a continuous period of more than six months - HELD THAT - Annexure-4 Colly is perused which indicates that the petitioner has submitted his GST returns up to May 2024. Further it appears that in the case of Ms. Yassung Yangfo vs the Union of India and 2 Ors a Coordinate Bench of this Court vide order dated 24.02.2025 relying upon a decision of another Coordinate Bench of this Court in Krishanu Borthakur vs. Union of India 2025 (1) TMI 721 - GAUHATI HIGH COURT had interfered with the GST cancellation order and also directed the Superintendent Central Goods and Services Tax Bhalukpung Range to intimate the petitioner therein the total outstanding statutory dues if any standing in the name of the petitioner till the date of cancellation of the GST registration. Taking note of the submissions of learned Advocates of both sides and also considering the facts and circumstances on the record the impugned cancellation order dated 04.05.2024 (Annexure-3 of this petition) is interfered with and accordingly the same stands set aside and quashed. The respondent No. 3 is directed to intimate the petitioner if any statutory dues are pending and if any such dues are pending then upon payment of the said dues the respondent No. 3 will pass appropriate order to restore the GST registration of the petitioner. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the cancellation of the petitioner's GST registration by the Superintendent of Central Goods and Services Tax was valid in light of the petitioner's failure to file GST returns due to illness.

- Whether the petitioner was entitled to apply for revocation of cancellation under Section 30 of the CGST Act, 2017, read with Rule 23(1) of the CGST Rules, 2017, despite the expiry of the prescribed limitation period.

- Whether the limitation bar on the petitioner's appeal against cancellation under Section 107(1) of the CGST Act could be a ground to refuse relief under Article 226 of the Constitution of India.

- Whether the petitioner should be granted relief similar to that granted in a coordinate bench decision in a related matter involving restoration of GST registration after cancellation.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of GST Registration Cancellation

The petitioner's GST registration was cancelled on the ground of non-filing of returns for a continuous period exceeding six months. The petitioner contended that the failure to file returns was due to illness, a fact that prevented timely compliance. The legal framework governing cancellation is found under the CGST Act, 2017, which empowers authorities to cancel registration where returns are not filed for six consecutive months.

The Court considered the petitioner's explanation and the fact that he was unaware of the cancellation until resumption of business activities in March 2025. The petitioner promptly filed all pending returns and paid due taxes and penalties. The Court noted that the cancellation order was dated 04.05.2024 and the petitioner filed returns up to May 2024, indicating compliance post-cancellation.

The Court's reasoning emphasized the principle of fairness and the petitioner's bona fide efforts to comply once aware of the cancellation. The illness was accepted as a mitigating circumstance explaining non-compliance, thereby casting doubt on the strict application of cancellation.

Right to Apply for Revocation of Cancellation Despite Limitation

Section 30 of the CGST Act, 2017, read with Rule 23(1) of the CGST Rules, 2017, provides for revocation of cancellation of GST registration within a prescribed time limit. The petitioner was denied the opportunity to apply for revocation on the ground that the limitation period, including any extended period, had expired.

The Court examined whether the limitation bar could be an absolute impediment to relief, especially where the petitioner was unaware of cancellation and had taken remedial action immediately upon discovery. The Court referred to a coordinate bench decision in WP(C) No. 70/2025, which had granted relief restoring GST registration under similar circumstances, thereby recognizing equitable considerations in such cases.

The Court found merit in the petitioner's plea to be allowed to regularize his status despite the lapse of limitation, particularly given the absence of any objection from the respondents and the petitioner's compliance with pending dues and penalties.

Limitation Bar on Appeal and Relief under Article 226

The petitioner's appeal under Section 107(1) of the CGST Act challenging cancellation was dismissed as barred by limitation. The question arose whether such dismissal precluded judicial review under Article 226 of the Constitution.

The Court observed that limitation bars in statutory appeals do not oust the jurisdiction of the High Court under Article 226, especially where fundamental rights or principles of natural justice are engaged. The petitioner's inability to file returns due to illness and ignorance of cancellation justified interference.

The Court relied on precedents where writ jurisdiction was invoked to remedy procedural or substantive injustice despite limitation in statutory remedies.

Grant of Relief Analogous to Coordinate Bench Decisions

The Court took note of the decision in Ms Yassung Yangfo vs Union of India and others, where a coordinate bench had quashed cancellation of GST registration and directed the tax authorities to intimate outstanding dues and restore registration upon payment.

The respondents did not oppose similar relief in the present case. The Court found the precedent persuasive and applicable, underscoring consistency in judicial approach to GST cancellation cases involving non-filing due to genuine reasons.

The Court directed the respondent authority to intimate any outstanding statutory dues within two weeks and upon payment, to restore the petitioner's GST registration, thereby ensuring procedural fairness and adherence to statutory mandates.

3. SIGNIFICANT HOLDINGS

"The impugned cancellation order dated 04.05.2024 is interfered with and accordingly, the same stands set aside and quashed."

"The respondent No. 3 is directed to intimate the petitioner if any statutory dues are pending and if any such dues are pending, then upon payment of the said dues, the respondent No. 3 will pass appropriate order to restore the GST registration of the petitioner."

Core principles established include the recognition that cancellation of GST registration for non-filing of returns may be set aside where non-compliance is due to genuine reasons such as illness, and where the petitioner acts promptly upon becoming aware of cancellation.

The Court affirmed that limitation bars under the CGST Act and Rules cannot be applied rigidly to deny relief where equity and justice demand otherwise, particularly in the context of writ jurisdiction under Article 226.

The final determination was that the GST registration cancellation was invalidated and the petitioner was entitled to restoration upon compliance with statutory dues, with the tax authorities mandated to facilitate this process expeditiously.