Case Law Details
Nitish Das Vs State of Assam (Gauhati High Court)
The petitioner, a registered assessee under the Assam Goods and Services Tax Act, 2017, had his GST registration cancelled by Order No. ZA180821027655E dated 21.08.2021 after he failed to file GST returns for a continuous period of six months. A show cause notice dated 28.06.2021 had been issued before cancellation, but according to the petitioner, it was uploaded on the common portal and, despite exercising diligence, he failed to notice it and therefore could not submit a reply. The petitioner also stated that although he subsequently updated his returns up to August 2021 and attempted to file an application for revocation, the prescribed time for filing both the revocation application and an appeal had already expired, leading him to file the present writ petition.
The Court referred to Section 39(1) of the CGST Act, 2017, which requires every registered person to furnish electronic returns for every calendar month or part thereof, containing prescribed particulars relating to supplies, input tax credit, tax payable, tax paid and other details.
The petitioner submitted that he could not file the returns required under Section 39(1) for about six months or more due to reasons beyond his control. However, he expressed his readiness and willingness to comply with all the requirements under the proviso to Rule 22(4) of the CGST Rules, 2017.
The Court also considered Section 29(2)(c) of the CGST Act, 2017, under which a proper officer may cancel the registration of a person who has not furnished returns for a continuous period of six months. It reproduced Rule 22 of the CGST Rules, 2017 governing the procedure for cancellation of registration. The proviso to Rule 22(4) provides that where a person served with a notice for contravention under Section 29(2)(b) or (c) furnishes all pending returns and makes full payment of tax dues together with applicable interest and late fee, the proper officer shall drop the proceedings and pass an order in Form GST REG-20.
The Court observed that a reading of the proviso to Rule 22(4) showed that if a person who has received a show cause notice under Section 29(2)(c) is ready and willing to furnish all pending returns and make full payment of tax along with applicable interest and late fee, the empowered officer has the authority to drop the proceedings and pass the prescribed order.
The parties also referred to the Court’s earlier order dated 11.10.2023 in W.P.(C) No. 6366/2023 (Sanjoy Nath vs. The Union of India and others), where the petitioner was stated to be similarly situated.
Considering that the petitioner’s registration had been cancelled for non-filing of returns for six months or more, the provisions of the proviso to Rule 22(4), and the serious civil consequences arising from cancellation of GST registration, the Court held that if the petitioner approached the empowered officer by furnishing all pending returns and making full payment of tax dues along with applicable interest and late fee, the officer had the authority and jurisdiction to drop the proceedings and pass the prescribed order.
Accordingly, the writ petition was disposed of with a direction that the petitioner should approach the concerned authority within two months seeking restoration of GST registration. If the petitioner submitted such an application and complied with all the requirements under the proviso to Rule 22(4) of the CGST Rules, 2017, the concerned authority was directed to consider the application for restoration of GST registration in accordance with law and take necessary steps for restoration as expeditiously as possible. No order as to costs was passed.
The Court further observed that the period stipulated under Section 73(10) of the Central Act/State Act would be computed from the date of the judgment, except for the financial year 2024-25, for which computation would be as per Section 44 of the Central Act/State Act. It also stated that the petitioner would be liable to pay arrears comprising tax, penalty, interest and late fees.
Cases Discussed:
- Sanjoy Nath vs. The Union of India and others, W.P.(C) No. 6366/2023, Order dated 11.10.2023.
FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT
1. Heard Mr. R S Mishra, learned counsel for the petitioner and Mr. S.C. Keyal, learned Standing Counsel, CGST for all the respondents.
2. The petitioner is an Assessee registered under the provisions of the Assam Goods and Services Tax Act, 2017 bearing registration No. 18CHEPD9229B1ZK and due to non-filing of GST returns for a continuous period of six months, the petitioner was issued with show cause notice dated 28.06.2021. Thereafter, the GST registration of the petitioner was cancelled vide Order No. ZA180821027655E dated 21.08.2021 without providing any opportunity of hearing to the petitioner.
3. Though the petitioner updated his return up to August, 2021 and tried to file revocation application, however, same could not be done as the time limit for filing revocation application was elapsed and in the meantime, the time to file appeal also elapsed. Accordingly, the present application is filed before this court.
4. The petitioner has averred that as the show cause notice was uploaded in the common portal, the petitioner despite exercise of his diligence, failed to notice the fact of uploading of the show cause notice in the common portal and as a result, he could not submit any reply to the show cause notice dated 28.06.2021.
5. Section 39(1) of the CGST Act, 2017 inter alia requires a registered person to furnish a return for every calendar month or part thereof, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, as may be prescribed.
6. Mr. Mishra, learned counsel appearing for the petitioner has submitted that due to reasons beyond his control, the petitioner could not submit the returns required to be submitted under Section 39(1) of the CGST Act, 2017 for a period of about 6 [six] months or more. He has, however, submitted that the petitioner is ready and willing to comply with all the formalities required as per proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017.
7. As per Section 29(2)(c), an officer, duly empowered, may cancel the GST registration of a person from such date, including any retrospective date, as he deems fit, where any registered person, has not furnished returns for a continuous period of 6 (six) months. Rule 22 of the CGST Rules, 2017 has laid down the procedure for cancellation of the registration. For ready reference, Rule 22 of the CGST Rules, 2017 is quoted herein below in its entirety :-
Rule 22 : Cancellation of Registration
(1) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under Section 29, he shall issue a notice to such person in FORM GST REG-17, requiring him to show cause, within a period of seven working days from the date of the service of such notice, as to why his registration shall not be cancelled.
(2) The reply to the show cause notice issued under sub-rule (1) shall be furnished in FORM REG-18 within the period specified in the said sub-rule.
(3) Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled, the proper officer shall issue an order in FORM GST REG-19, within a period of thirty days from the date of application submitted under Rule 20 or, as the case may be, the date of the reply to the show cause issued under sub-rule (1), (or under sub-rule (2A) of Rule 21A) cancel the registration, with effect from a date to be determined by him and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid under sub-section (5) of Section 29.
(4) Where the reply furnished under sub-rule (2) (or in response to the notice issued under sub-rule (2A) of Rule 21A) is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in FORM GST REG-20 : Provided that where the person instead of replying to the notice served under sub-rule (1) for contravention of the provisions contained in Clause (b) or Clause (c) of sub-section (2) of section 29, furnishes all the pending returns and makes full payment of the tax dues along with applicable interest and late fee, the proper officer shall drop the proceedings and pass an order in FORM GST REG-20.
(5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself.
8. It is discernible from a reading of the proviso to sub-rule (4) of Rule 22 of the CGST Rules 2017 that if a person who has been served with a show cause notice under Section 29(2)(c) of the CGST Act, 2017 is ready and willing to furnish all the pending returns and to make full payment of the tax itself along with applicable interest and late fee, the officer, duly empowered, can drop the proceedings and pass an order in the prescribed Form i.e. Form GST REG-20.
9. The learned counsel for the parties have also referred to an Order dated 11.10.2023 passed in a writ petition, W.P.(C) no. 6366/2023 (Sanjoy Nath vs. The Union of India and others) wherein the petitioner therein was similarly situated like the present petitioner.
10. Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the CGST Act, 2017 for the reason that the petitioner did not submit returns for a period of 6 (six) months and more; and the provisions contained in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 and cancellation of registration entails serious civil consequences, this Court is of the considered view that in the event the petitioner approaches the officer, duly empowered, by furnishing all the pending returns and make full payment of the tax dues, along with applicable interest and late fee, the officer duly empowered, has the authority and jurisdiction to drop the proceedings and pass an order in the prescribed Form.
11. In such view of the matter, this writ petition is disposed of by providing that the petitioner shall approach the concerned authority within a period of 2 (two) months from today seeking restoration of his GST registration. If the petitioner submits such an application and complies with all the requirements as provided in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, the concerned authority shall consider the application of the petitioner for restoration of his GST registration in accordance with law and shall take necessary steps for restoration of GST registration of the petitioner as expeditiously as possible. With the observations made and the direction given above, the writ petition is disposed of. No cost.
12. It is needless to say that the period as stipulated under Section 73(10) of the Central Act/ State Act shall be computed from the date of the instant judgment, except for the financial year 2024-25, which shall be as per Section 44 of the Central Act/ State Act. The petitioner herein also be liable to make payment of arrears i.e. tax, penalty, interest and late fees.
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