GST Registration Cancellation Impermissible When Tax Liability is Discharged
Issue: Whether the Goods and Services Tax (GST) registration of a taxpayer can be legitimately canceled by the authorities solely on the ground of non-filing of GST returns under Section 29(2)(c) of the CGST Act, even when the taxpayer has already discharged the entire tax liability, interest, and late fees through the Electronic Cash Ledger.
Facts:
The petitioner, M/s Abound It Services, failed to file GST returns for the period March 2024 to May 2024.
The taxpayer had, however, already deposited the entire outstanding GST, interest, and penalty through their Electronic Cash Ledger (ECL) for the period in question.
The Adjudicating Authority subsequently issued a Show Cause Notice (SCN) and an order cancelling the GST registration, citing non-filing of returns under Section 29(2)(c).
The petitioner’s appeal to the appellate authority was rejected, leading to the writ petition in the High Court.
Decision:
The Gujarat High Court allowed the petitioner to file the pending GST returns and directed that upon such compliance, the order of cancellation of registration will stand revoked.
Key TakeDowns:
Tax Payment is Substantive Compliance: The court prioritized the substantive discharge of the tax liability (payment of GST, interest, and penalty) over the procedural lapse of non-filing of the return form itself.
Revocation Mandate: The judgment establishes that when a taxpayer demonstrates a bona fide intention to comply and clears all financial dues, the authorities must allow them to rectify the non-filing, and the cancellation must be revoked immediately upon the returns being filed.
High Court Intervention: This ruling is consistent with the High Court’s jurisdiction to intervene and grant relief in cases where the strict application of procedural law (Section 29(2)) results in an overly harsh penalty (cancellation of registration), especially when the main revenue interest has been secured. * Condition for Revocation: The Court’s order is conditional; if the returns filed are not in accordance with law, the taxpayer must forthwith pay any outstanding demand raised by the respondents, or the cancellation will be enforced.
Source :- ABOUND-IT-SERIVICES