Case Law Details
Panchatantra Tours And Travels Vs Union of India (Gauhati High Court)
Summary: In Panchatantra Tours And Travels Vs Union of India, the petitioner, a sole proprietor registered under the CGST/AGST Acts, faced cancellation of GST registration due to non-filing of returns for a continuous period of six months. A show cause notice was issued granting 30 days to respond and appear for a personal hearing, with a warning that failure would result in an ex-parte decision. Subsequently, an order dated 15.04.2024 cancelled the registration without assigning reasons.
The petitioner contended that financial hardship prevented filing returns and responding to the notice within time. Upon later accessing the portal, the petitioner found that the time for reply had lapsed and the cancellation order had already been passed. It was further submitted that all pending returns up to April 2024 had since been filed, and tax dues along with interest and late fees had been paid. However, the petitioner was unable to apply for revocation of cancellation due to expiry of the prescribed 270-day time limit, prompting the filing of the writ petition.
The Court noted that under Section 29(2)(c) of the CGST Act, registration may be cancelled for failure to file returns for six consecutive months, and Rule 22 of the CGST Rules prescribes the procedure. It highlighted the proviso to Rule 22(4), which allows proceedings to be dropped if the taxpayer furnishes all pending returns and clears dues with applicable interest and late fees.
Considering that cancellation of registration has serious civil consequences and that the petitioner expressed willingness to comply with statutory requirements, the Court held that an opportunity should be granted. It observed that if the petitioner approaches the proper officer, furnishes pending returns, and pays all dues, the authority may consider dropping the proceedings and restoring registration in accordance with law.
Accordingly, the writ petition was disposed of with directions permitting the petitioner to approach the concerned authority within two months seeking restoration of GST registration. The authority was directed to consider such application and take appropriate steps for restoration expeditiously, subject to compliance with Rule 22(4). The petitioner would remain liable to pay all arrears including tax, penalty, interest, and late fees. The Court clarified that the order was passed on the peculiar facts of the case and shall not be treated as a precedent.
FULL TEXT OF THE JUDGMENT/ORDER OF GUWAHATI HIGH COURT
Heard Ms. Mamoni Das, learned counsel for the petitioner and Shri S. Chetia, learned Senior Standing Counsel, CGST for the respondent nos. 2 & 3. Also heard Ms. M. Das, on behalf of Shri S. K. Medhi, learned CGC for the respondent no. 1.
2. As per the facts projected, the petitioner is carrying out its business under the name & style, “Panchatantra Tours & Travels” and the sole proprietor is an assessee registered under the Central Goods and Services Tax (CGST) Act, 2017/Assam Goods and Services Tax (AGST) Act, 2017 bearing registration No. 18AEOPD9468F2Z0. Because of non-filing of GST returns for a continuous period of six months, the petitioner was served with a show cause notice bearing reference No. ZA181123009779D dated 13.11.2023 asking it to furnish reply to the aforesaid notice within a period of 30 (thirty) days from the date of service of notice and to appear for personal hearing on 11.12.2023. It was also mentioned that if he fails to furnish a reply within the stipulated date or fails to appear for personal hearing on the appointed date and time, the case will be decided ex-parte on the basis of the available records and on merits. Thereafter, the impugned order dated 15.04.2024 was passed by the Superintendent, Guwahati D-5, whereby the petitioner’s GST registration has been cancelled without assigning any reason.
3. The petitioner has contended that due to financial hardships in business, he was neither able to file return nor could visit the GST portal and thereby could not submit any reply to the said show cause notice. It is further contended that when the petitioner came across the said notice, the time for filing reply was already over and order had also been uploaded in the portal.
4. It is further contended that he has updated all pending returns upto the month of April, 2024 as allowed by the GST portal and while updating returns, the petitioner has also discharged all GST dues along with late fees and interest.
5. Thereafter, he had tried to file the necessary application seeking revocation of GST cancellation, however, the same could not be filed as the time limit prescribed for filing of revocation application was elapsed and a message was displayed in the screen “timeline of 270 days from the date of cancellation order provided to taxpayer to file application for revocation of cancellation is expired.” Accordingly, this writ petition has been filed.
6. Ms. Mamoni Das, learned counsel for the petitioner has 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. On the other hand, Shri Chetia, the learned Senior Standing Counsel has opposed the writ petition and further has raised the issue of delay in approaching the Court.
7. As per Section 29(2)(c) of the Act, 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.
8. Rule 22 of the CGST Rules, 2017 being the bone of contention, is extracted herein below:
“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.”
9. It is discernible from a reading of the proviso to sub-rule (4) of Rule 22 of the Rules of 2017 that if a person, who has been served with a show cause notice under Section 29(2)(c) of the Act, 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.
10. The learned counsel for the parties have also referred to an Order dated 11.10.2023 passed in a writ petition being WP(C) No.6366/2023 (Sanjoy Nath vs. The Union of India and others) wherein the petitioner therein was similarly situated like the present petitioners.
11. Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the Act, for the reason that the petitioners 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 approach 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, may consider to drop the proceedings and pass an appropriate order in the prescribed Form.
12. 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 her GST registration. If the petitioner submit such an application and complies with all the requirements as provided in the proviso to Rule 22 (4) of the Rules, the concerned authority shall consider the application of the petitioner for restoration of GST registration in accordance with law and shall take necessary steps for restoration of GST registration of the petitioner as expeditiously as possible.
13. It is needless to say that the period as stipulated under Section 73 (10) of the Central GST Act/State GST Act shall be computed from the date of the instant order, except for the financial year 2024-25, which shall be as per Section 44 of the Central GST Act/State GST Act. The petitioner herein would also be liable to make payment of arrears i.e. tax, penalty, interest and late fees. It is clarified that this order has been passed on the peculiar facts of this case and shall not be taken as a precedent.
The writ petition accordingly stands disposed of.
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