GST Registration Cancellation Set Aside Due to Adverse Circumstances and Willingness to file all pending returns
Summary in Key Points:
- Issue: Whether the cancellation of the assessee’s GST registration was justified, considering the adverse circumstances faced by the assessee and their willingness to comply with GST regulations.
- Facts: The assessee’s GST registration was cancelled for non-filing of returns for six months. The assessee explained that they were facing adverse family circumstances due to a partner’s illness, which led to negligence in business operations and non-filing of returns. The assessee expressed willingness to file all pending returns and comply with GST regulations.
- Decision: The High Court set aside the cancellation order, acknowledging the assessee’s adverse circumstances and willingness to comply. The court directed the assessee to file all pending returns and the GST authorities to consider revoking the cancellation upon compliance.
ANALYSIS:
The High Court ruled in favor of the assessee, setting aside the cancellation order and providing the following directions:
- Adverse Circumstances: The court acknowledged the genuine difficulties faced by the assessee due to a partner’s illness and the impact it had on their business operations.
- Opportunity of Hearing: The court confirmed that the assessee was given sufficient opportunity to be heard, as they had responded to the show cause notices issued by the department.
- Willingness to Comply: The assessee expressed their willingness to file all pending GST returns and comply with the regulations.
- Restoration of Registration: The court directed the assessee to submit all pending returns. Upon compliance, the GST authorities were directed to consider revoking the cancellation of registration.
Important Note: This case demonstrates the High Court’s consideration for taxpayers facing genuine difficulties and their willingness to comply with GST regulations. The court recognized the importance of allowing businesses to rectify their mistakes and continue operating within the GST framework. This approach promotes tax compliance and ensures that taxpayers are not unduly penalized for circumstances beyond their control.
HIGH COURT OF MADHYA PRADESH
Mohd. Shahzar
v.
State of Madhya Pradesh
Anand Pathak and Hirdesh, JJ.
WRIT PETITION No. 22500 of 2024
NOVEMBER 28, 2024
K.G. Singh, Adv. for the Petitioner. Praveen N. Surange, Adv. for the Respondent.
ORDER
Anand Pathak, J.- Heard finally with the consent of the parties.
2. Present petition is preferred under Article 226 of the Constitution of India taking exception to the order dated 29.02.2024 (Annexure P/1) passed by the Joint Commissioner (Appeal), whereby the appeal preferred by the appellant against the order dated 22.08.2023, whereby the application for revocation of cancellation was rejected, has been dismissed.
3. Precisely stated, facts of the case are that the petitioner is local resident of Gwalior and owner and proprietor of the firm namely; National Electric Electronics Telecom Contractor, Shiv Colony, Dabra. As alleged, due to some adverse family circumstances, the petitioner could not pay attention to his business and did not submit GST returns for the year 2022-23 within time frame, resulting into cancellation of his registration.
4. It is the grievance of the petitioner that sufficient opportunity of hearing was not given to the petitioner. If the hearing had been given, then he would have show caused his reason for non-submission of GST returns. However, he fairly submits that if cost is imposed and chance is given for revocation of registration and to start business again, then he would not be prejudicially affected and he would start his business again.
5. Learned counsel for the respondents referred different provisions viz. Section 25, 29 and 30 of the the Central Goods and Services Tax Act, 2017 and Rule 21 (a) and (h), Rules 22 and 23 of the Central Goods and Services Tax Rules, 2017 and submits that the petitioner was given sufficient opportunity of hearing. He may apply for fresh registration of case.
6. Heard learned counsel for the parties.
7. From the perusal of the documents attached with the petition, it appears that a show cause notice for cancellation of registration was issued by the department on 08.05.2023, in response to which reply was filed by the petitioner on 09.06.2023. Thereafter, another show cause notice was issued on 08.08.2023, in response to which order dated 22.08.2023 was passed, by which his registration was cancelled. When appeal was preferred, then appellate authority dismissed the appeal vide order dated 29.02.2024. Therefore, it is not a case where opportunity of hearing was not provided to the petitioner. It was very much provided but thereafter order was passed. However, question is that the petitioner is facing adversity and wants to go again into the main stream of tax regime, therefore, it would be in the interest of department/revenue also to take the petitioner into regular main stream as part of formal economy, so that he may conduct business while giving regular tax to the authority.
6. Therefore, the impugned orders dated 29.02.2024 (Annexure P/1) and dt.22.08.2023 (Annexure P/2) are hereby set aside and the petitioner is directed to submit all the pending GST returns specially for the period when the registration was cancelled and if such pending returns are submitted before the authority, then authority shall consider the case for revocation of registration. Since the petitioner committed default, therefore, he is liable to pay the cost of Rs.50,000/- (Rupees Fifty Thousand), which shall be paid to the department alongwith the pending GST returns.This order is passed in peculiar facts and circumstances of the case.
Petition stands allowed and disposed of in above terms.