Delayed GST Cancellation Appeal Must Be Decided on Merits: Rajasthan HC

Govind Traders Vs Union of India (Rajasthan High Court)

Summary: Rajasthan High Court allowed the writ petition filed by Govind Traders challenging the rejection of its appeal against cancellation of GST registration solely on the ground of limitation. The petitioner’s GST registration had been cancelled with effect from 13.11.2023 and the Order-in-Original was passed on 15.12.2023. According to the petitioner, its proprietor Govind Tak was not adequately educated and lacked the technical competence required to operate a computer or understand the online GST compliance system. He had therefore entrusted GST compliances to an accountant/local advocate, who allegedly neither informed him about the requirement of filing online GST returns nor filed them, resulting in non-filing of returns continuously for six months. The petitioner also stated that no physical show cause notice was received and that he became aware of the Order-in-Original only subsequently. His appeal was nevertheless dismissed on 10.07.2024 solely as time-barred without considering the grounds on merits.

The High Court observed that cancellation of GST registration was virtually a “civil death”, bringing the petitioner’s business operations to a standstill. Considering the petitioner’s dependence upon the accountant/local advocate and the circumstances explaining the failure to make timely statutory compliances, the Court found the reasons stated for non-compliance to be genuine. The Court followed its earlier Division Bench decisions in Molana Construction Company Vs Central Goods And Service Tax Department, Man Singh Tanwar Vs Commissioner, Central Goods and Services Tax Department and RPC PSIPL JV Vs State of Rajasthan, where directions had been issued for entertaining delayed appeals on merits. Accordingly, the appellate order dated 10.07.2024 was set aside and the Appellate Authority was directed to consider and decide the petitioner’s appeal on merits in accordance with law, subject to deposit of late fees, penalty and other statutory deposits as admissible. The Court did not itself direct immediate restoration of GST registration or adjudicate the cancellation dispute on merits.