Can application for revocation of the cancellation of a registration can be rejected as time barred?

Case Title

Tvl.Natarajapathy Textiles vs The Commissioner of Commercial Taxes Chennai, The Assistant Commissioner (ST), Virdhunagar.

Court

Madras High Court

Honorable Judges

Justice C.Saravanan

Citation

2022 (3) GSTPanacea 92 HC Madras

W.P.(MD). No.3181 of 2022

Judgement Date

22-March-2022

Council for Petitioner

B.Robon

Council for Respondent

V.Nirmal Kumar

The Madras High Court bench of Justice C.Saravanan has held that no useful  purpose will be served by keeping those assessee out of GST regime,a assessee will continue to business & supply goods/services & further effect interest of revenue.

FACTS OF THE CASE

The Goods and Services Tax (GST) Registration of the petitioner was cancelled as the petitioner had failed to file returns continuously for a period of six months. Prior to passing of the impugned order, Show Cause Notice, dated 15.10.2019 as to why GST Registration of the petitioner should not be cancelled.

It appears that the petitioner had not replied to the said Show Causse Notice, which resulted cancelling GST Registration. Thereafter, the petitioner filed an application for revocation of the cancellation of a registration which was rejected as time barred

Petitioner challenged the Impugned GST Registration Cancellation Order. He was unable to give a reply to the said Show Cause Notice, due to the health issues. It is further submitted that even though the he has not replied to the said Show Cause Notice, the respondents ought to have given a justifiable reason for cancelling of the GST o Registration. Further the same was not within the knowledge of the petitioner due to the lock down imposed by the Government on account of the outbreak of covid-19 pandemic. Subsequently, the petitioner filed pending returns for the months up to October 2019.

Respondents submits that GST registration cancellation order, dated 07.11.2019,was on the ground that the petitioner has not responded to the Show Cause Notice, dated 15.10.2019.

Petitioner was given enough time as prescribed period specified under Section 107 available wef 15.03.2021 after excluding the period from 15.03.2020 to 14.03.2021 to file an application against the impugned order but failed to . if the said period falls beyond the period the prescribed period specified under Section 107, then the Deputy Commissioner, GST Appeals and Joint Commissioner, GST Appeals shall admit the application and passed order on merits exercise such action

COURT HELD

Considering the over all facts and circumstances of the case, it was held that no useful purpose will be served by keeping those petitioners out of GST regime assesses would still continue to do business and supply goods/services. By not bringing them back to the GST fold/regime, GST will not be paid, unless of course, the recipient is liable to pay tax on reverse charge basis. Otherwise, also there will be no payment of value added tax. The ultimate goal under the GST regime will stand defeated. Therefore, these petitioners deserve a right to come back into the GST Regime.

Thus he impugned orders are liable to be quashed and with few safeguards and Writ Petitions are allowed subject to the conditions:

The petitioners are directed to file the returns prior cancellation within 45 days  with payment of tax ,fine fees in cash as per provisions of the Act , if has not been filed.  

Input Tax Credit was earned, it shall be allowed to be utilised only after scrutinising and approving by the respondents or any other competent authority.

The respondents may also impose such restrictions / limitation on petitioners as may be warranted to ensure that there is no undue passing of Input Tax Credit pending

On payment of tax, penalty and uploading of returns, the registration shall stand revived forthwith.

The respondents shall take suitable steps by instructing GST Network to make suitable changes in the architecture of the GST Web portal to allow these petitioners to file their returns and to pay the tax/penalty/fine.

The above exercise shall be carried out by the respondents within a period of thirty (30) days from the date of receipt of a copy of this order,

ANALYSIS OF THE JUDGEMENT

The provisions of the GST Enactments and the Rules made there under read with various clarifications issued by the Central Government pursuant to the decision of the GST Council and the Notification issued thereunder intention is to only facilitate and not to debar and de-recognised assesses from coming back into the GST fold. Therefore, if such a person is not allowed to revive the registration, the GST will not be paid, The ultimate goal under the GST regime will stand defeated. Therefore, these petitioners deserve a right to come back into the GST fold and carry on their trade and business in a legitimate manner.

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Natarajapathy Textiles


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Madras High Court