Orissa HC allows revival of cancelled GST Registration Certificate

Nikhil Mogha

28 May, 2024

The High Court of Orissa has allowed the petitioner to apply for the revocation of the cancelled GST registration certificate on the condition of payment of tax, interest and penalty. The petitioner is allowed to file GST returns for the period before the cancellation of the registration certificate within the stipulated time of 60 days from the judgement date. The court gives due regard to the extraordinary jurisdiction under Article 226 and allows the petitioner’s appeal since there is no body of appeal yet constituted as per section 109 of the Central Goods and Service Tax Act.  

Facts of the case

Through an order, the registering authority has cancelled the petitioner’s GST registration certificate with effect from 15-10-2019 under the provisions of Section 29(2) (c) of the act for non-filing of GST returns for a consecutive period of 6 months. The petitioner, instead of applying for the revocation of cancellation of registration under Section 30, filed an appeal on 05-08-2021 after a delay of 660 days under section 107. As a result, the appellate authority dismissed the petitioner’s appeal as time-barred. Since the appellate tribunal is not yet constituted under section 109 of the CGST act, the petitioner files the appeal by way of a writ petition in the high court stating that the petitioner is ready to file past returns along with payment of tax and interest.  

Submission from the Petitioner

It is submitted by the petitioner that instead of applying for the revocation of cancellation of GST registration certificate under Section 30 of the Central Goods and Service Tax act read with Rule 23 of CGST Rules 2017; the appellate authority shall not prima facie reject the appeal of the petitioner as time-barred. It is contended by the petitioner that the appellate authority shall have taken a pragmatic approach and understood the difficulty faced by the petitioner and also by other suppliers and recipients. Hence the appellate authority shall have given the petitioner the benefit of remedying his default and allow him to file for revocation of the cancelled GST registration Certificate.

It is also contended by the petitioner that the government, through Notification no. 19/2021 dated 01-06-2021, has provided relief to the taxpayers by reducing or waiving the late fee for non-furnishing Form GSTR-3B for the period July 2017 to April 2021, provided the taxpayers shall furnish the returns between 01-06-2021 to 30-11-2021. Therefore, the petitioner asserts that if the registration had not been cancelled, he would have had an opportunity to file the returns between 01-06-2021 and 30-11-2021.

Moreover, it is also contended by the petitioner that the government, by way of Notification no. 34/2021 dated 29-08-2021, has also extended the time for filing the application for revocation of cancellation of registration certificate to 30-09-2021, where the due date of filing returns falls between 01-03-2020 to 31-08-2021. The petitioner, therefore, argues that the appellate authority is in power to grant an opportunity to deposit delayed tax along with penalty and also provide an opportunity to approach to registering authority under Section 30 for condoning the delay.

Issue of the Case

Whether a writ petition is maintainable when the limitation period for filing an appeal under Section 107 of the Central Goods and Service Tax Act becomes time-barred?

Observations of the court

The court has allowed the writ of the petitioner and observed that the appellate authority had not taken a view of the relevant notifications and amendments as carried out by the government from time to time. It is stated by the court that the government, keeping in view the pandemic, has relieved the burden on the taxpayers by waiving the late fees for the taxpayers who could not have filed the returns for July 2017 to April 2021. Henceforth, it is observed by the court that since the GST registration certificate of the petitioner was cancelled on 15-10-2019, there was no scope left for the petitioner to avail of the benefit.

The court also believed that the government’s intentions were clear. It is to facilitate the business by providing a smooth tax payment structure and not debarring the taxpayers. Therefore, the court held that the fundamental right of the petitioner to carry on the business under Article 19 (1) (g) shall not be violated without any unreasonable conditions.

The court further observes that the in the event of non-restoration of the GST registration certificate, the petitioner would not be able to raise an e-invoice as required under the new GST regime. Henceforth, the denial of the revival of the GST registration certificate would amount to a violation of his fundamental right under Article 21 (Right to Livelihood) and Article 19 (1) (g) (Right to carry on business). Along with that, the petitioner also has no right to appeal since there is no appellate tribunal yet constituted under Section 109 of the CGST act which subsequently amount to violation of right under Article 21.

Decision of the Court

Based on the facts & circumstances of the case and the legal position, the court, instead of referring the matter back to the appellate authority, has ordered the proper officer or registering authority or superintendent to provide an opportunity for the petitioner to take all the required steps to revive GST registration certificate. Moreover, the court has ordered the following directions:

1. The petitioner is allowed to file returns for the period before the cancellation of the GST registration certificate. If such returns are not filed, the petitioner shall file the returns along with the defaulted tax, interest, penalty and late fee within 60 days of receiving the judgement.
2. The payment shall not be made from the unutilised or unclaimed input tax credit lying in the petitioner’s account.
3. The petitioner shall apply for condonation of delay within 7 days from the payment of all the amount.
4. The opposite parties shall complete all the above activities within 90 days of receiving the judgement.

Conclusion

The Central Goods and Service Tax act is the enabling act for tax payment. It provides the business to obtain a GST registration certificate before carrying on any activity. Henceforth, GST registration plays a key role in process of handling business activities. In the present case, the court allows the petitioner’s views and provides an opportunity to file an application for the revival of the registration certificate even after the limitation period. It is stated by the court that not restoring the certificate will hamper the day-to-day activities of the petitioner, consequently violating the rights under Article 19 (1) (g). Similarly, the non-establishment of appellate authority would further affect the petitioner’s right under Article 21. Therefore to protect the petitioner’s rights, the court has ordered the proper officer to revive the registration certificate of the petitioner.

Read our Article:Offences and Prosecution: GST Act