GST Registration Cancellation Revoked Due to Cryptic Order and Assessee’s Willingness to Comply
Issue: Whether a GST registration cancellation order, passed due to non-filing of returns for six months, can be set aside if the assessee claims unawareness of the show cause notice (SCN) on the GST portal and the cancellation order itself is cryptic/stereotyped, especially when the assessee is now willing to comply by paying dues and filing returns.
Facts:
- A show cause notice (SCN) was issued to the assessee for cancellation of registration due to non-filing of returns for six consecutive months.
- The assessee contended that they were unaware of the generation of this notice on the GST portal and, consequently, failed to file a reply.
- As a result of the non-response, an impugned order was passed, cancelling the assessee’s registration. The assessee described this order as “cryptic and stereotyped.”
- Despite the non-compliance, the assessee had already paid the GST along with interest and penalty, and expressed willingness to abide by the provisions of the GST Act.
Decision: The impugned show cause notice and the impugned cancellation order were set aside. The assessee was directed to file an application for revocation of cancellation under Section 30 of the CGST Act, 2017. The decision was in favor of the assessee.
Key Takeaways:
- Deficient Communication/Awareness: The court acknowledged the assessee’s claim of being unaware of the SCN on the GST portal. While digital communication is standard, this points to potential practical issues or the need for more robust notification mechanisms.
- Cryptic/Stereotyped Orders: The court implicitly criticized the nature of the cancellation order. Orders passed by tax authorities, especially those with significant consequences like registration cancellation, should be well-reasoned and detailed, not just boilerplate templates. A cryptic order may suggest a lack of application of mind.
- Willingness to Comply: A crucial factor in the assessee’s favor was their demonstrated willingness to comply with the GST Act, including having already paid the GST along with interest and penalty. This indicates a genuine desire to rectify the default, rather than evade tax.
- Balancing Compliance and Opportunity: The judgment strikes a balance between ensuring compliance with GST provisions and providing an opportunity to genuinely willing taxpayers to regularize their status. While the assessee initially failed to comply, their subsequent actions and stated intent tilted the scales.
- Setting Aside SCN and Order: By setting aside both the SCN and the cancellation order, the court effectively nullified the flawed process that led to the cancellation.
- Direction to Apply for Revocation (Section 30): Instead of directly revoking the registration, the court directed the assessee to follow the statutory process of applying for revocation under Section 30. This ensures that the proper procedure is followed, and the department gets to verify compliance before reinstating the registration.
- Natural Justice Implication: Although not explicitly stated as a violation of natural justice, the “unawareness of notice” and the “cryptic order” collectively hint at a process that might have fallen short of adequate opportunity for the assessee to respond effectively.
HIGH COURT OF GUJARAT
Kirtidan Samarthdan Gadhavi
v.
State of Gujarat
BHARGAV D. KARIA and D.N. Ray, JJ.
R/SPECIAL CIVIL APPLICATION NO. 2362 of 2025
APRIL 23, 2025
.
Kuntal A Parikh, Adv. for the Petitioner. Ms. Puja Ashar, AGP for the Respondent.
ORDER
Bhargav D. Karia, J. – Heard learned advocate Mr. Kuntal Parikh for the petitioner and learned Assistant Government Pleader Ms. Puja Ashar for the respondents.
2. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for the following reliefs:
“a. That this Hon’ble Court be pleased to issue a writ of mandamus or any other appropriate writ, direction or order quashing and setting aside the impugned orders dated 16.02.2023 (Annexure A) passed by the Respondent no.2 and;
b. That this Hon’ble Court be pleased to issue a writ of mandamus or any other appropriate writ, direction or order quashing and setting aside the impugned Notice dated 09.11.2022 (Annexure B) issued by Respondent no.2 and;
C. Pending notice, admission and final disposal of this petition, this Hon’ble Court by way of interim relief be pleased to direct the respondent authorities to restore the registration of the petitioner with effect from 31.03.2022 and
d. Ex parte ad interim relief in terms of prayer 9(c) be granted and;
(e) For costs and
(f) That this Hon’ble Court be pleased to grant such other and further relief/s as are deemed just and proper in the facts and circumstances of this Case.”
3. Brief facts of the case are as under:
3.1 The petitioner is a proprietor of M/s. Kirtidan Gadhavi and is engaged in providing services of performing arts.
3.2 The petitioner got registration under the Gujarat Goods and Services Tax Act, 2017 [for short ‘the GST Act’] w.e.f. 26.10.2017.
3.3 On 09.11.2022, a system generated show-cause notice under section 29(2)(c)of the GST Act for cancellation of registration was uploaded on GST Portal stating that the petitioner has not filed the returns for a continuous period of six months and vide the said notice, the registration of the petitioner was suspended with immediate effect without giving an opportunity of hearing and without recording any reasons.
3.4 The petitioner being unaware of generation of the impugned notice on the GST Portal, has failed to file its reply to the impugned show-cause notice. Consequently, the respondent No.2 has passed an ex-parte impugned order dated 16.02.2023 in FORM GST REG-19 and the registration of the petitioner was cancelled w.e.f. 31.03.2022.
3.5 It is the case of the petitioner that the Chartered Accountant of the petitioner, who was engaged to file the GST returns and had access to the portal, could not apprise him of the show-cause notice as he had moved out of India during July 2022 without informing the petitioner. However, later on, the petitioner came to know that his returns were not filed since April 2022. Moreover, the petitioner has also paid total tax of Rs. 32,12,410/- along with interest of Rs. 5,28,902/- and fees of Rs. 2,96,000/-for late filing of the returns.
3.6 It is the case of the petitioner that the show-cause notice is bereft of any reason except the reason that the petitioner could not file returns from April, 2022 and as a consequence thereof, the registration of the petitioner is cancelled. Being aggrieved, the petitioner approached this Court by way of present petition challenging the impugned showcause notice dated 09.11.2022 and impugned order dated 16.02.2023.
4. Learned advocate Mr. Kuntal Parikh submitted that the petitioner could not file GST returns for six months for the reasons stated in the revocation application. It was submitted that the impugned order has been passed in cryptic and stereotyped manner. Reliance was placed on the decision of this Court in case of Aggrawal Dyeing and Printing Works v. State of Gujarat GST 82/66 GSTL 348 (Gujarat).
4.1 It was further pointed out that the show-cause notice was issued under Rule 22(1) of the GST Rules read with section 29(2)(c) of the GST Act for cancellation of the registration for nonfiling of the returns and thereafter, by the impugned order, the respondent No.2 has cancelled the registration for not paying amount payable by the petitioner on or before 26.02.2023.
4.2 It was further submitted that has already paid the outstanding amount of GST on 24.04.2024 of Rs. 12,50,428/- and on 28.01.2025 of Rs. 14,35,352/- and Rs. 12,27,932/-. It was submitted that the petitioner has also paid the interest and late fees and therefore, the respondent authorities may consider the application for revocation of the registration which may be filed by the petitioner within the reasonable time.
4.3 It was further submitted that due to pre-occupation of the petitioner, the adherence to the provision of the GST Act and the Rules could not be made and the petitioner shall henceforth be regular in filing GST returns and comply with the provisions of the Act and the Rules. It was also submitted by learned advocate for the petitioner that the petitioner is ready and wiling to file an undertaking before the respondent-authority to the said effect.
5. On the other hand, learned AGP Ms. Puja Ashar submitted that the petitioner referred to and relied upon the affidavit- in-reply filed on behalf of respondent No.2 and submitted that on two earlier occasions, the respondent-authorities had revoked the registration. However, the petitioner is continuously in habit of not filing GST returns and as such, the respondent-authorities had no option but to cancel the registration of the petitioner.
5.1 Learned AGP Ms. Ashar invited attention of the Court to the following averments made in the affidavit-in-reply:
“14. It is further submitted that the registered mobile number and email ID on the GSTN Portal is that of the petitioner itself, therefore the alleged fact that the CA of the petitioner used to file returns and due to his moving out of the India, the petitioner was unaware of nonfiling of returns is absolutely incorrect and the draft amendment dated 27.02.2025 is filed only with a view to eyewash the illegality committed by the petitioner.
15. It is submitted that the GST registration of the petitioner was cancelled various times on account of non-filing of returns for a continuous period of six months the details of which are mentioned herein below:
(a) Firstly show cause notice dated 31. 08.2019 was issued and thereafter an order in FORM GST REG 19 dated 12 9 2019 was passed cancelling the registration of Petitioner w.ef. 31-3-2019. The same was later revoked vide order date 211-2020 since the Petitioner had filing revocation application and filed the outstanding returns. Copies of show cause notice dated 31-8-2019, order dated 12-9-2019 and 21-1-2020 are annexed herewith and marked as ‘ANNEXURE – R1 COLLY’ to the present reply.
(b) Thereafter, only within a period of 7 months from date of restoration of registration number, 2nd show cause notice dated 14-8-2020 was issued and thereafter again after filing of requisite returns, the proceedings for cancellation of registration was dropped vide order dated 25-8-2020. Copies of show cause notice dated 14-82020 and order dated 25-8-2020 are annexed herewith and marked as ANNEXURE =R2 COLLY to the present reply.
(c) Thereafter, again 3rd show cause notice dated 2-2-2022 was issued for purpose of non-filing of returns for a continuous period of six months and thereafter again after filing of requisite returns, the proceedings for cancellation of registration was dropped vide order dated 2-3-2022. Copies of show cause notice dated 2-2-2022 and order dated 2-32022 are annexed herewith and marked as ANNEXURE – R3 COLLY to the present reply.)”
5.2 It was therefore submitted that the respondent-authorities were required to issue fourth show-cause notice on 09.11.2022 for cancellation of registration on the ground of non-filing of the returns for a continuous period of six months and thereafter also, the petitioner did not pay the outstanding GST returns which is paid recently. In such circumstances, it was submitted that the case of the petitioner is not required to be considered under the provisions of the GST Act and the Rules.
6. Having heard learned advocates for the respective parties and considering the facts of the case, it is apparent that the petitioner has failed to comply with the provisions of the GST Act and as such, the registration of the petitioner was liable to be cancelled as per section 29(2)(c) of the GST Act. However, it is also pertinent to note that the petitioner has paid the GST along with interest and penalty and the petitioner is also ready and willing to abide by the provisions of the GST Act and the Rules, as stated at bar by learned advocate for the petitioner and the petitioner has also showed willingness to file an undertaking to that effect.
7. In such circumstances, considering the facts of the case, the petition succeeds and is accordingly allowed. Impugned show cause notice dated 09.11.2022 and impugned order dated 16.02.2023 are hereby quashed and set aside. The petitioner is directed to file application for revocation of the cancellation of the GST registration within a period of four weeks from today and on receipt of such application, the respondent-authorities are directed to consider the same in accordance with law ignoring the earlier litigation, orders and the conduct of the petitioner. The petitioner is further directed to file an undertaking that henceforth, the petitioner shall be regular in filing GST return as per the provisions of the GST Act and the Rules and shall also regularly deposit the GST on the provisional income of the petitioner.
8. The petitioner shall also deposit a cost of Rs. 5000/- in the Gujarat State Legal Services Authority.
9. With the aforesaid direction, the petition is disposed of notice is discharged.