Case Law Details
Southern Enterprises Vs Appellate Joint Commissioner ST (Telangana High Court)
The Hon’ble Telangana High Court in M/s. Southern Enterprises v. Appellate Joint Commissioner ST [W.P. No. 2471 of 2023 dated January 31, 2023] has set aside the order cancelling GST Registration of the assessee due to non-filing of GST Returns for the continuous period of 6 months, on the ground that the GST Tribunal has not been constituted and the assessee should not be left without remedy. Remanded the matter back to the Revenue Department to decide the matter afresh in accordance with the law and to provide reasonable opportunity of hearing to the assessee. Further, permitted the assessee to submit the GST Returns as per the statute.
Facts:
M/s. Southern Enterprises (“the Petitioner”) is a proprietorship firm engaged in the business of sale and offering service of air conditioners. The Petitioner was issued a Show Cause Notice (“SCN”) dated November 9, 2020 (“the Impugned SCN”) by the Revenue Department (“the Respondent”) due to the non-filing of GST Returns for the continuous period of 6 months. A reply dated November 19, 2020 was submitted, however it was not considered satisfactory by the Respondent therefore, the GST Registration of the Petitioner was cancelled under Section 29 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) vide Order-in-Original dated December 10,2020 (“the OIO”).
Subsequently, an appeal was filed by the Petitioner, which was rejected by the Appellate Authority vide Order-in-Appeal dated January 11, 2023 (“the OIA”) on the grounds that it was filed beyond the period of limitation.
Being aggrieved, this petition has been filed contending that,
Issue:
Whether the cancellation of GST Registration of the Petitioner is sustainable?
Held:
The Hon’ble Telangana High Court in W.P. No. 2471 of 2023 held as under:
- Noted that, since no GST Tribunal has been constituted in the State of Telangana in terms of Section 112 of the CGST Act, this writ petition has been filed. Further, the issue is no longer res integra.
- Relied on its earlier judgment in M/s. Chenna Krishnama Charyulu Karampudi v. Additional Commissioner (Appeals-1) [Writ Petition No. 27071 of 2022 dated June 27, 2022], wherein, the Court remanded the matter back to the primary authority for reconsideration and did not express any opinion on the merits of the case as the GST Registration of the assessee was cancelled on the ground of non-filing of returns and as GST Tribunal was not constituted under Section 109 of the CGST Act, Petitioner was left without any remedy.
- Held that, since there is no GST Tribunal in the State of Telangana and the Petitioner should not be left without remedy, it would be just and proper if the entire matter is remanded back to Respondent to reconsider the case of the Petitioner and thereafter to pass appropriate order in accordance with law.
- Set aside the OIO and the OIA.
- Remanded the matter back to the Respondent for the fresh decision in accordance with the law and to provide reasonable opportunity of hearing to the Petitioner.
- Permitted the Petitioner, to submit the GST Returns as per the statute.
Relevant Provisions:
Section 29 of the CGST Act:
“Cancellation or suspension of registration-
(1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where,––
(a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
(b) there is any change in the constitution of the business; or
(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to optout of the registration voluntarily made under sub-section (3) of section 25:
Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.
(2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,––
(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed; or
(b) a person paying tax under section 10 has not furnished the return for a financial year beyond three months from the due date of furnishing the said return; or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for such continuous tax period as may be prescribed; or
(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:
Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard.
Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed.
(3) 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.
(4) The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration under this Act.
(5) Every registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed:
Provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery under section 15, whichever is higher.
(6) The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed. ”
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Mr. M.Naga Deepak, learned counsel for the petitioner and Mr. L.Venkateshwar Rao, learned Standing Counsel, Commercial Tax representing the respondents.
1. Petitioner is a proprietorship firm engaged in the business of sale and offering service of air conditioners. Following introduction of Goods and Services Tax (GST) regime, petitioner got itself registered under the Central Goods and Services Tax Act, 2017 (briefly ‘the Act’ hereinafter) vide GSTIN 36CNEPM0349F2Z4.
2. A show cause notice dated 09.11.2020 was issued by respondent No.4 to the petitioner to show cause as to why petitioner’s GST registration should not be cancelled for non-filing of GST returns for a continuous period of six months. It appears that in response to the aforesaid show cause notice dated 09.11.2020, petitioner had submitted reply dated 19.11.2020. However, reply of the petitioner was found to be not satisfactory whereafter, order dated 10.12.2020 was passed by respondent No.4 cancelling the GST registration of the petitioner.
4. Aggrieved by the same, petitioner preferred appeal before respondent No.1 under Section 107 of the Act. However, on the ground that the appeal was filed not only beyond the period of limitation but also beyond the extended period of limitation, the same was dismissed by respondent No.1 vide the order dated 11.01.2023.
5. Since no Tribunal has been constituted in the State of Telangana in terms of Section 112 of the Act, the present writ petition has been filed.
6. Issue raised in this writ petition is no longer res integra. In M/s. Chenna Krishnama Charyulu Karampudi v. Additional Commissioner (Appeals-1)1, which has been followed in subsequent decisions, this Court had remanded the matter back to the file of the primary authority to reconsider and pass appropriate order after giving opportunity of hearing to the petitioner. It was held as follows:
We have perused the order dated 19.04.2022. This is an order passed by the first appellate authority under Section 107(1) of the CGST Act. As per sub-section (1) of Section 107 of the CGST Act, limitation for filing appeal is three months from the date of communication of the order appealed against. Under sub-section (4) of Section 107 of the CGST Act, the appellate authority may allow the appeal to be presented within a further period of one month, provided sufficient cause is shown by the appellant.
Though the lower appellate authority may be right in holding that while it may allow filing of an appeal beyond the limitation of three months for a further period of one month, therefore, by extension of limitation beyond the extended period of one month delay beyond the extended period of one month cannot be condoned, we are of the view that such a stand taken by respondent No.1 may adversely affect the petitioner. This is more so because respondent No.2 had suo motu cancelled the GST registration of the petitioner on the ground of non-filing of returns and as GST Tribunal has not been constituted under Section 109 of the CGST Act, petitioner would be left without any remedy.
We further find that the issue pertains to cancellation of GST registration of the petitioner. In the facts and circumstances of the case, it would be just and proper if the entire matter is remanded back to respondent No.2 to reconsider the case of the petitioner and thereafter to pass appropriate order in accordance with law.
In the light of the above and without expressing any opinion on merit, we remand the matter back to the file of respondent No.2 to consider the grievance expressed by the petitioner against cancellation of GST registration and thereafter pass an appropriate order in accordance with law. Needless to say, when the respondent No.2 hears the matter on remand, petitioner shall submit all the returns as per the statue.
Thus, following the above decision, we set aside the order dated 10.12.2020 passed by respondent No.4 as well as the order dated 11.01.2023 passed by respondent No.1 and remand the matter back to respondent No.4 for a fresh decision in accordance with law. Respondent No.4 shall afford a reasonable opportunity of hearing to the petitioner while passing the fresh order on remand. In the remand proceedings, it will be open to the petitioner to submit the GST returns as per the statute.
This disposes of the writ petition. No costs.
As a sequel, miscellaneous petitions, pending if any, stand closed.
Note
1. 2022(7) TMI 82
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