Revocation of cancellation of GST registration – Cancelled due to non-filing of Returns

Tahura Enterprise Vs Union of India (Gujarat High Court)

HC take notice of the fact that the Central Board of Indirect Taxes and Customs extended the time limit for filing application for revocation of cancellation of registration and the limitation for all the orders passed on or before 12.06.2020 was to effectively commence from 31.08.2020. As the application filed by the writ-applicants for revocation of cancellation of registration was looked into by a quasi-judicial authority, the order of the Supreme Court extending the period of limitation in view of the Covid-19 Pandemic would apply and in such circumstances, the limitation in accordance with the order passed by the Central Board of Indirect Taxes and Customs could be said to have been extended.

Indisputably, the application requesting for restoration of registration was filed in July 2021 i.e. during the period when the order of the Supreme Court extending the limitation was in operation. More importantly, the writ-applicants have paid the requisite amount towards tax on the basis of self assessed liability on 06.09.2021. Since the registration of certificate of the writ-applicants came to be cancelled solely on the ground of non-filing of the returns, which was on account of non-payment of tax and the writ-applicants now having paid such outstanding tax, the registration certificate of the writ-applicants should be ordered to be restored so that they are able to continue with their business.

In view of the aforesaid, the impugned order dated 10.07.2019 cancelling the registration certificate is hereby quashed and set aside. The respondents are directed to forthwith restore the registration certificate of the writ-applicants under the provisions of the G.S.T. Act.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

1. By this writ-application under Article 226 of the Constitution of India, the writ-applicants have prayed for the following reliefs:-

(A) be pleased to issue a writ of certiorari or writ in the nature of certiorari or any other appropriate writ or order quashing and setting aside order dated 10.7.2019 (annexed at Annexure A) passed for cancelling the registration certificate of the Petitioner under the GST Acts;

(B) be pleased to issue a writ of certiorari or writ in the nature of certiorari or any other appropriate writ or order quashing and setting aside order dated 14.9.2021 (annexed at Annexure F) passed by the appellate authority under the GST Acts;

(C) be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the Respondents to forthwith restore the registration certificate of the Petitioners under the GST Acts;

(D) Pending notice, admission and final hearing of this petition, be pleased to stay the operation, execution and implementation of impugned order dated 10.7.2019 (annexed at Annexure A) and the Respondents may please be directed to restore the registration certificate of the Petitioner;

(E) Ex-parte ad interim relief in terms of prayer C may kindly be granted;

(F) Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray.

2. The facts giving rise to this litigation may be summarized as under:-

2.1 The writ-applicants are engaged in the business of trading an iron and steel scrap. The writ-applicants were duly registered under the G.S.T. Acts.

2.2 It is the case of the writ-applicants that the 2^nd writ-applicant i.e.the Proprietor of the 1^st writ-applicant is uneducated and has only attended the school upto the 4^th Standard. The writ-applicants are small scale traders in a village in Panchmahal district.

2.3 Due to personal as well as financial difficulties, the writ-applicants could not file the returns under the G.S.T. Acts for some months in the year 2019. The writ-applicants pointed out that the returns under the G.S.T. Act can be filed only after full payment of the tax dues as per such returns and the writ-applicants were not in a position to pay tax.

2.4 A show cause notice was issued to the writ-applicants on 24.5.2019 proposing to cancel the registration certificate under the G.S.T. Act on the ground that the writ-applicants had not filed the returns.

2.5 The writ-applicants submitted before the officer that the writ-applicants were facing financial difficulties and therefore, it was not possible for them to immediately file the returns.

2.6 The 3^rd respondent authority, however, proceeded to pass the impugned order dated 10.7.2019 cancelling the registration certificate of the writ-applicants under the G.S.T. Act by stating in the order as follows: “registration is cancelled for want of compliance”. No other reasons were assigned in the order.

2.7 It is the case of the writ-applicants that they were not served with a physical copy of the order canceling the registration certificate. However, the consultant of the writ-applicants informed them that returns could be filed only upon payment of tax dues as per such returns.

2.8 The financial condition of the writ-applicants was not at all sound and they were not in a position to immediately pay the tax dues as per returns.

2.9 The writ-applicants, therefore, did not file restoration application or appeal under the G.S.T. Act under a bonafide belief that compliance by way of filing of returns would be possible only once they were able to manage to arrange money for paying up the tax as per the returns to file.

2.10 Thereafter, the Covid pandemic took a grip of the country disrupting all businesses and it also seriously affected the health of the 2^nd writ-applicant for a brief period.

2.11 Ultimately, in July 2021 the writ-applicants could muster the finances for making payment of tax dues under the G.S.T. Act and therefore, they immediately filed a restoration application before the authority.

2.12 The writ-applicants made good their assurance in their application by filing all returns and paying due taxes under the G.S.T. Act on 06.09.2021. On such basis, the request was made for restoration of the registration certificate.

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