Restoration of GST registration allowed despite limitation bar due to bona fide medical and professional hardships
Issue
Whether the High Court can exercise its writ jurisdiction to restore a GST registration that was cancelled for non-filing of returns, even after the statutory limitation period for appeal has expired, given the petitioner’s bona fide difficulties (illness and accountant dispute).
Facts
Registration & Default: The petitioner obtained GST registration in July 2017 but failed to file returns for six consecutive months, leading to a Show Cause Notice (SCN) on September 2, 2021.
Cancellation: Due to non-response to the SCN, the registration was cancelled suo motu by the department on October 22, 2021.
Petitioner’s Defense: The non-compliance was attributed to a dispute with a Chartered Accountant (who withheld exclusive login credentials) and severe health issues (including COVID-19 complications) that prevented the petitioner from accessing the portal or receiving the notices.
Failed Restoration Attempts: The petitioner made multiple representations. The department briefly re-enabled portal access in March 2023, but technical restrictions prevented full compliance.
Rejection of Appeal: The Appellate Authority rejected the petitioner’s statutory appeal as time-barred under Section 107 of the CGST Act, prompting the writ petition.
Decision
Bona Fide Intent: The Court observed that the petitioner was a legitimate trader who intended to continue business and had been prevented from complying due to “peculiar facts” (medical crisis and professional negligence).
Substantive Justice: It was held that strict adherence to statutory limitation periods should not defeat substantive rights when genuine, non-deliberate obstacles exist.
Revenue Interest: The Court noted that restoring the registration allows the department to recover outstanding tax and interest, which serves the interest of the Revenue better than keeping the entity out of the tax net.
Order for Restoration: The department was directed to restore the GSTIN, provide fresh login credentials, and unlock the portal to allow the petitioner to file all pending returns along with applicable taxes, interest, and late fees.
Writ Jurisdiction: The Court exercised its extraordinary powers under Article 226 to overcome the procedural bar of limitation that constrained the Appellate Authority.
Key Takeaways
Writ Remedy for Limitation Bar: While statutory appellate authorities are bound by strict limitation periods (e.g., Section 107), High Courts can condone delays under Article 226 if “sufficient cause” (like severe illness or agent negligence) is proven.
Professional Negligence as Defense: A taxpayer may be granted relief if non-compliance is directly traceable to a professional (Accountant/CA) withholding credentials or failing to act, provided the taxpayer acted bona fide.
Revenue-Positive Approach: Courts increasingly view the restoration of registration as a “revenue-positive” measure, as it brings a non-compliant taxpayer back into the fold to pay past dues.