Case Law Details
Sarvagya Infrastructure Pvt Ltd Vs Assistant Commissioner (ST) (Madras High Court)
Madras HC Quashes GST Registration Cancellation Order as continuous period of six months of non-filing of GST Return had not lapsed when the show cause notice was issued.
The Madras High Court recently rendered a significant judgment in the case of Sarvagya Infrastructure Pvt Ltd Vs Assistant Commissioner (ST), wherein it addressed the cancellation of GST registration. The petitioner, engaged in sub-contracts in the construction and real estate sector, faced cancellation due to alleged non-filing of GSTR 3B returns.
The petitioner contended that they regularly filed returns until March 31, 2022, and ceased operations thereafter. Upon receiving a show cause notice in August 2022, they promptly filed returns for the subsequent months. The crux of the petitioner’s argument rested on Section 29 of the GST enactments, which mandates cancellation only after six months of non-filing. Given the timely filing up to March 2022 and subsequent compliance, the petitioner asserted the cancellation order was unwarranted.
Contrarily, the respondent argued that the petitioner failed to file returns for April to July 2022-2023, and the cancellation order was justified. However, the court observed that the six-month period, calculated from April, did not lapse when the show cause notice was issued. Moreover, the petitioner rectified the alleged non-compliance by filing returns upon receiving the notice, thereby mitigating the breach.
The Madras High Court ruled in favor of the petitioner, quashing the cancellation order and restoring their GST registration. This judgment reaffirms the importance of procedural adherence and timely compliance with tax regulations. It underscores the principle that corrective actions, such as filing pending returns, can invalidate grounds for cancellation. The case serves as a precedent for taxpayers facing similar challenges and emphasizes the need for diligent record-keeping and prompt response to regulatory notices.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order cancelling the GST registration of the petitioner is challenged.
2. The petitioner was engaged in undertaking sub-contracts in the construction and real estate sector. According to the petitioner, requisite returns were filed regularly until 31.03.2022. Since there was no business thereafter, it is stated that returns were not filed. In those circumstances, the petitioner received a show cause notice dated 23.08.2022 alleging non-filing of GSTR 3B returns. Upon receipt thereof, the petitioner filed the GSTR 3B returns for the months of April, May, June and July for assessment period 2022-2023. The impugned order was issued thereafter on 28.11.2022.
3. Learned counsel for the petitioner submits that Section 29 of applicable GST enactments enables cancellation of registration only if returns are not filed for a continuous period of six months. By pointing out that returns had been filed up to March in assessment period 2021-2022, learned counsel submits that the continuous period of six months of non-filing had not lapsed when the show cause notice was issued. He further submits that returns were filed for the months of April, May, June and July, thereafter, thereby remedying the non-compliance. In these circumstances, learned counsel submits that the impugned order is not sustainable.
4. Mr. Prasanth Kiran, learned Additional Government Pleader, accepts notice for the respondent. He submits that the returns filed by the petitioner for April to July 2022-2023 are not on record. He further submits that the order of cancellation was issued in November 2022 and that the petitioner carried on business but filed nil returns.
5. The petitioner has placed on record the GSTR 3B return for March. The show cause notice was issued in August 2022. At that point of time, if the six month period had been calculated from April, it would have ended in September 2022. Consequently, the respondent was not entitled to invoke Section 29 and call upon the petitioner to show cause as to why the registration should not be cancelled. More importantly, the petitioner filed the returns for the months of April, May, June and July upon receipt of the show cause notice. By doing so, the breach complained of was remedied. The impugned order of cancellation cannot be sustained in these circumstances.
6. Therefore, W.P.No.8834 of 2024 is allowed and the order of cancellation is quashed. As a consequence, the GST registration of the petitioner shall stand restored. Consequently, connected miscellaneous petitions are closed. No costs.
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