Late fee for the period from date of cancelation of registration to the date of its revocation, Goods and Services Tax - GST

[Rakesh Garg]

To facilitate the trade, the Government has brought the Amnesty and issued Notification No. 03/2023-CT dated 31 March 2023 for revocation of cancellation of registration in case of non-filing of returns.

In a few of our client's cases, after revocation of cancellation of registration, when the Company tried to file returns (GSTR-1 & 3B) for the period from the effective date of cancellation of registration to the date of revocation, the GSTN system does not accept these returns (GSTR-1 & 3B), without paying Late Fee.

In all these cases, registration was cancelled due to non-filing of returns and the Company has already paid the entire late fee up to the date of cancellation of registration.

In this regard, against the levy of late fee, it may be submitted as under: -

(1) For the period, when the registration was cancelled, the Company was not a registered person; hence, sections 37, 39 and 47 of the CGST Act are not applicable.

(2) As per the second proviso to Rule 29(1), inserted with effect from 23.04.2019, all returns due for the period from the date of the order of cancellation of registration till the date of the order of revocation of cancellation of registration shall be furnished by the said person within a period of thirty days from the date of order of revocation of cancellation of registration. Hence, the due date of furnishing of returns is decided through the II Proviso of the said Rule 29(1).

(3) In a similar case in Modicum Enterprise (OPC) Private Limited Vs. Deputy Commissioner of State Tax/Assistant Commissioner of State Tax - 2022 (12) TMI 1041 - CALCUTTA HIGH COURT, the Hon’ble Calcutta High Court held that late fee is not payable in such cases.

(4) To pay the late fee for this period, appears to be illogical as well.

Do we require to pay the late fee, which comes in Lacs in a couple of cases? Is there any other course of action since these returns should be filed within 30 days from the date of revocation?

Thanks

Posts / Replies

[Amit Agrawal]

In my respectful submission, unless and until initial cancellation of registration was itself illegal (i.e. based on wrong factual premises etc. that is to say, even though there was no contravention under clause (b) or clause (c) of sub-section (2) of section 29 but registration was wrongly cancellated by Dept.), late fee u/s 47 (1) needs to be paid from due date of filing return (as originally envisioned. i.e. if there was no cancellation of registration) till date of actual filing of return.

Such late fee can be waived off / reduced only through valid notifications supporting the same (which is not the case under subject notification under discussion here) and not otherwise.

Revocation of cancellation of registration and allowing filing of statement/s u/s 37 (1) or/and returns u/s 39 for past period itself means that subject assessee is treated as 'registered person' even during the intermittent period (i.e. from date of cancellation of registration till its revocation).

Second proviso u/r 29 (1) cannot read to mean shifting of due date of filing returns u/s 39 (which is also linked to due date of payment of taxes u/s 39 (7)).

Rule 29 or subject Notification No. 03/2023-CT dated 31 March 2023 gives opportunity to assessee to regularise its past conduct. But, same does not give it any right to seek waiver from late fees levied u/s 47 (1) (i.e. when such right is not conferred by any notification) or interest u/s 50 by claiming that due date of filing statements u/s 37 or return u/s 39 got shifted for such assessee or to avoid penalty u/s 73 or 74 (i.e. if otherwise leviable).

No person can claim any benefit when wrongful situation arising on account of his own doing and when law / rules / notification does not confer such benefits.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion. I respect contrary views.

[Rakesh Garg]

Amit Ji, Thanks.

Will your views remain the same after going through Rule 23(3), relating to the filing of a return after suspension (a stage earlier to cancellation) of registration, which reads as,

(3) A registered person, whose registration has been suspended under sub-rule (1) or sub-rule (2), or sub-rule (2A) shall not make any taxable supply during the period of suspension and shall not be required to furnish any return under section 39.

[Amit Agrawal]

In my earlier post above, kindly read given reference/s to rule 23 (i.e. Revocation of cancellation of registration) & not to rule 29.

[Amit Agrawal]

Dear Shri Rakesh Garg Ji,

Issue raised by you was with reference to 'Notification No. 03/2023-CT dated 31 March 2023 for revocation of cancellation of registration in case of non-filing of returns'. Accordingly, my reply above needs to be read in that context.

Furthermore, one also needs to read Section 29 (3) in the content of your original query and same reads as under:

"The cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation."

These are ex facie views of mine and the same should not be construed as professional advice / suggestion. I respect contrary views.

[Amit Agrawal]

*Please read as ................ in the context (& not content) of your original query...........

[Padmanathan Kollengode]

I agree with Ld Amit Ji. In my opinion, there is no option but to pay late fee unless there is a notification in this regard.

[Samir Ahsan]

Dear Members,

I applied for the reinstatement of my GST in June 2023, after its cancellation in 2020. I diligently paid the penalties incurred up to its cancellation, following the latest amnesty guidelines, and also submitted Rs 1000/-. Recently, my GST has been restored with a 30-day deadline to file all returns till date, despite them being NIL. Unfortunately, after filing the first return, I discovered a penalty challan of Rs 12,000/-, implying substantial penalties till date.

I am struggling to comprehend this situation. If I had the financial means, why would I seek the restoration of my old GST unless it was crucial for my business? Paying such a substantial amount doesn't seem reasonable to me. I question whether the government is genuinely supporting businesses or primarily focused on revenue generation through penalties.

I propose a more sensible approach to amnesty. If these measures are not effective, then amnesty may not be necessary. On the other hand, if amnesty is beneficial for businesses and the government alike, penalties during the cancellation process should be minimal, perhaps not exceeding 1-2 thousand rupees. This would provide businesses with another chance to rectify issues, survive, and contribute to increased tax revenue for the government.

I seek your assistance and understanding in navigating this perplexing situation.

With regards, Samir Ahsan