Case Law Details
Turret Industrial Security Pvt. Ltd Vs Union of India (Jharkhand High Court)
Petitioner has sought quashing of the ex parte order of cancellation of GST registration of the petitioner, on the ground that no opportunity was given to the petitioner. The GST registration has been cancelled on the ground of failure to file six monthly returns from August, 2019 to January, 2020 by the petitioner within the prescribed time limit. According to the petitioner, it had filed GSTR–I return for the period in question, but could not file GSTR-3B returns due to non-payment of the outstanding dues from its clients, as their business were shut down.
Petitioner has prayed for a direction for revocation of the cancellation of registration of the petitioner to enable his clients to release the outstanding payment. He has also sought direction upon the respondents to accept his belated returns in GSTR-3B for the period in question and allow him to deposit the admitted tax in installment after receiving the outstanding amount from its clients.
Petitioner has also sought quashing of the letter dated 13.07.2020 (Annexure-5) issued by respondent no. 3 wherein his request for revocation of order of cancellation of GST registration has been declined and he has been directed to clear the entire dues of tax liability along with interest and thereafter, only upon filing of GSTR- 3B, petitioner should contact the jurisdictional Assistant Commissioner for revocation of the cancellation order.
We have considered the submission of learned counsel for the parties and taken note of the relevant pleadings on record relied upon by them.
Admittedly, no reply to the show-cause was filed by the petitioner. However, a perusal of the impugned order at Annexure- 2 dated 13.03.2020 shows the observation of the Superintendent, CGST – respondent no. 4 that he has examined the reply and submissions made at the time of hearing by the assesse and is of the opinion that his registration is liable to be cancelled for the following reasons. Thereafter, the order records that the assesse has not responded to the show-cause notice dated 26.02.2020 for cancellation of his GST registration on the ground of failure to file six monthly returns from August, 2019 to January, 2020 within prescribed time limit. We do not intend to enter into the merits of the impugned order as the ingredients of a proper show-cause notice as per the prescribed form GST REG-17 are completely absent. Petitioner could not furnish his reply as no date or time was indicated therein. As such, the cancellation of registration resulting from such an incomplete/deficient show-cause notice (SCN) also cannot be sustained being violative of principles of natural justice.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
Heard learned counsel for the petitioner Mr. Deepak Kumar Sinha and Mr. P.A.S. Pati along with Ms. Ranjana Mukherjee, learned counsel for the respondent.
2. Petitioner has sought quashing of the ex parte order of cancellation of GST registration of the petitioner dated 13.03.2020 (Annexure-2) issued by respondent no. 4 – Superintendent, Jamshedpur Urban, Bistupur North Range, on the ground that no opportunity was given to the petitioner. The GST registration has been cancelled on the ground of failure to file six monthly returns from August, 2019 to January, 2020 by the petitioner within the prescribed time limit. According to the petitioner, it had filed GSTR–I return for the period in question, but could not file GSTR-3B returns due to non-payment of the outstanding dues from its clients, as their business were shut down.
Petitioner has prayed for a direction for revocation of the cancellation of registration of the petitioner to enable his clients to release the outstanding payment. He has also sought direction upon the respondents to accept his belated returns in GSTR-3B for the period in question and allow him to deposit the admitted tax in installment after receiving the outstanding amount from its clients.
Petitioner has also sought quashing of the letter dated 13.07.2020 (Annexure-5) issued by respondent no. 3 wherein his request for revocation of order of cancellation of GST registration has been declined and he has been directed to clear the entire dues of tax liability along with interest and thereafter, only upon filing of GSTR- 3B, petitioner should contact the jurisdictional Assistant Commissioner for revocation of the cancellation order. He has further asked for setting- aside the letter dated 17.07.2020 issued by respondent no. 4 asking him to pay GST liability of Rs. 1,82,01,863/- and interest Rs. 32,30,155/- within 15 days of the receipt of the letter , failing which coercive action shall be initiated under Section 79(1)(c) of the CGST Act, 2017.
3. Learned counsel for the petitioner submits by reference to Annexure- 1, the show cause notice for cancellation of registration issued in form GST REG-17 under Rule 22(1) dated 26.02.2020 that it is no notice in the eye of law since no appointed date or time have been indicated therein for the petitioner to furnish a reply. Annexure- 2 is the order of cancellation of registration dated 13.03.2020 which again shows complete non-application of mind. It records that the undersigned has examined his reply and submissions made at the time of hearing and is of the opinion that his registration is liable to be cancelled for the following reason(s). Thereafter, the order further records that assesse has not responded to the show-cause notice dated 26.02.2020, hence GST registration is being cancelled effective from 13.03.2020. Learned counsel for the petitioner has further submitted that before the impugned order was passed on 13.03.2020, petitioner had filed GSTR-3B return of August, 2019. As such, the order is also without jurisdiction since six months’ default in filing of GSTR-3B was not there at the time of passing of the order.
4. Petitioner had filed a belated reply vide Annexure- 3 on 18.03.2020 requesting the respondent not to cancel his GST registration so that he can file the GSTR–3B return upon receipt of payments from his clients and to allow him to clear the pending GST liability for the relevant period.
5. Learned counsel for the petitioner has placed reliance upon the decision of the Gujarat High Court in the case of “Mahadev Trading Company Vs. Union of India” passed in R/Special Civil Application No. 11262 of 2020 dated 28.09.2020 reported in MANU/GJ/1395/2020. He submits that in exactly similar circumstances, the Hon’ble Gujarat High Court has been pleased to quash the show-cause notice and the order of cancellation of registration. Therefore, the impugned order deserves to be quashed.
6. Learned counsel for the respondent has taken us to the contents of the counter-affidavit filed on their behalf. Though averments have been made that the cancellation of registration has not been passed without personal hearing, but at the same time, it is averred that petitioner did not respond to the show-cause notice dated 26.02.2020. He did not file GSTR–3B return from August, 2019 to January, 2020. Petitioner deliberately did not respond or paid GST liability and interest. It is further the case of the respondents that under Rule 22(2) of the CGST Rule, 2017 read with Section 29(2)(c) of the CGST Act, 2017, a reply is to be filed in GST REG-18 to be submitted electronically. It is further contended that the petitioner has been a habitual defaulter between the period July, 2017 to February, 2020. Payment of GST liability in installments is not available under the G.S.T. laws. As per GSTR-I return filed from September, 2019 to July, 2020 , the facility of T.C. to the tune of Rs. 1,82,01,863/- have been passed on to the petitioner’s clients, but self-declared liability has not been discharged. Therefore, interest of Rs. 32,30,155/- for delayed payment has also been imposed. Repeated request letters were also sent to him on 17.02.2020 and 03.03.2020. It is stated that GST portal bars filing of return for belated period. Petitioner has been habitual defaulter and should not be allowed to escape the liability for failing to file GSTR-3B returns in time.
7. Learned counsel for the respondent Mr. P.A.S. Pati has tried to explain the infirmity in the show-cause notice dated 26.02.2020 and also explain the observations recorded in the impugned order dated 13.03.2020. Mr. Jitendra Kumar, Superintendent, CGST and Central Excise , Bistupur, North Range, Jamshedpur,-respondent No. 4 has also joined the proceedings pursuant to the order dated 01.02.2021. He has pointed out that without giving the date and time, the required form GST Reg-17 under Rule 22(1) of the CGST Rules, 2017 is not generated. The officer is at the back end and the show-cause notice is communicated through the GSTN portal to the assesse. He has tried to absolve his responsibility regarding the absence of any date and time in the show-cause notice attributing it to technical error. The respondent has similarly in respect of the impugned order dated 13.03.2020 explained that the observation that, ‘whereas the undersigned has examined your reply and submissions made at the time of hearing, and is of the opinion that your registration is liable to be cancelled for following reason(s)’ are system generated. The findings of the respondent no. 4 are recorded therein at para 1 which clearly says that the assesse has not responded to the show-cause notice dated 26.02.2020 for cancellation of his GST registration on the ground of his failure to file six monthly returns from August, 2019 to January, 2020, within prescribed time limit. The respondents have attributed technical error in the show-cause notice and the impugned order.
8. We have considered the submission of learned counsel for the parties and taken note of the relevant pleadings on record relied upon by them. The show-cause notice in Form GST REG –17 issued under Rule 22(1) on 26.02.2020 for cancellation of registration of the petitioner is extracted hereunder:
“Form GST REG-17
[See Rule 22(1)]
Reference Number: ZA20022001 78745
Date : 26/02/2020
To
TURRET INDUSTRIAL SECURTY PRIVATE LIMITED
43-A.J.C. ROAD, CONTRACTORS AREA, BISTUPUR, JAMSHEDPUR,
Jharkhand, 831001
Show Cause Notice for Cancellation of Registration
Whereas on the basis of information which has come to my notice, it appears that your registration is liable to be cancelled for the following reasons:
1 Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of six months.
You are hereby directed to furnish a reply to the notice within seven working days from the date of service of this notice.
If you fail to furnish a reply within the stipulated date or fail to appear for personal hearing on the appointed date and time, the case will be decided ex parte on the basis of available records and on merits.
Place : Jharkhand
Date : 26/02/2020
jitendra kumar
Superintendent
Jamshedpur Urban: Jamshedpur: Jharkhand”
9. Admittedly, no reply to the show-cause was filed by the petitioner. However, a perusal of the impugned order at Annexure- 2 dated 13.03.2020 shows the observation of the Superintendent, CGST – respondent no. 4 that he has examined the reply and submissions made at the time of hearing by the assesse and is of the opinion that his registration is liable to be cancelled for the following reasons. Thereafter, the order records that the assesse has not responded to the show-cause notice dated 26.02.2020 for cancellation of his GST registration on the ground of failure to file six monthly returns from August, 2019 to January, 2020 within prescribed time limit. We do not intend to enter into the merits of the impugned order as the ingredients of a proper show-cause notice as per the prescribed form GST REG-17 are completely absent. Petitioner could not furnish his reply as no date or time was indicated therein. As such, the cancellation of registration resulting from such an incomplete show-cause notice also cannot be sustained being violative of principles of natural justice.
10. For the reasons recorded above, the impugned order of cancellation of registration dated 13.03.2020 (Annexure-2) is quashed. However, the respondent may proceed in accordance with law, if the law permits. Writ petition is allowed in the aforesaid terms.
