Allahabad High Court revoked the GST registration cancellation and criticized the callous attitude of department

In the matter of M/S ANSARI CONSTRUCTION VERSUS ADDITIONAL COMMISSIONER CENTRAL GOODS AND SERVICES TAX (APPEALS) AND 2 OTHERS, (Writ Tax No. – 626 of 2020), the respondent have issued the show cause notice and further in this an ex parte order was passed for cancellation of registration.

In this judgement Hon’ble Court expressed its surprise that why this instructions could not be obtained at earlier levels and the callous attitude of the Department has resulted in the assessee being harassed by approaching one forum after the other and wasting his considerable financial resources as well as time.

Henceforth the petitioner filed an appeal for revocation of cancellation of GST registration by justifying that he had filed all the returns till date. The appeal made by the appellant to appellate and adjudicating authority, has not been of any help to the petitioner,

The Hon’ble Allahabad High Court held that in case of cancellation of GST registration due to non-filing of GST returns, applicant is liable to file all pending returns along with payment of applicable taxes for the purpose of revocation. It is the responsibility of the department to check such returns and allow revocation of cancellation of GST registration. 

1. Brief facts of the case

1. The petitioner has a proprietorship firm and was registered for providing constructions services. 
2. The petitioner failed to file GST returns for a continuous period of 6 months. Therefore, the respondent served show cause notice proposing to cancel GST registration of petitioner on 21st November, 2019. 
3. Persurance of such notice, the respondent passed an ex-parte order cancelling GST registration of respondent on 30th November, 2019, i.e., within 9 days of issuance of notice.
4. The petitioner submitted all pending GST returns and also made payment of pending GST alongwith interest and late fee and filed application for revocation of cancellation of GST registration on 19th December, 2019, i.e., within 30 days from date of issuance of notice.
5. In response to the application for revocation of GST registration cancellation, the respondent in turn issued a show cause notice requesting for personal appearance of the petitioner without specifying any reason for issuance of SCN.
6. The petitioner appeared and apprised that all the returns have already been filed.
7. However, ignoring such submission, the respondent rejected the application for revocation on the ground that details of amount and challans were not submitted.

2. Petitioner appeal before Appellate Authority

1. Aggrieved by the order of Adjudicating authority, the petitioner filed an appeal before the Appellate Authority appealing that application for revocation of GST registration cancellation was wrongly rejected as all challans are available on GST portal itself. Petitioner filed copy of all returns and challans.
2. However, the Appellate Authority dismissed the appeal and affirmed the order passed by the Adjudicating authority. For issuing orders, the Appellate Authority relied on email received from divisional offices which convey that the taxpayer did not upload any document online.
3. The AA further mentioned that the petitioner had only stated that all the liabilities have been paid by them even and he has not disclosed any evidence of the same.

Aggrieved by the order Appellate Authority, The petitioner filed an appeal before Hon’ble High Court of Allahabad.

3. Contention of the petitioner before before hon’ble Allahabad High Court

1. Aggrieved by order of adjudicating as well as appellate Authority, the petitioner filed a writ petition before Hon’ble High Court.
2. Respondent submitted that all records with respect to filing of GST return and payment of challans are available on GST portal itself and same was submitted before Appellate Authority also.
3. However, the Appellate Authority rejected the appeal only on the basis of mails received from jurisdictional officers. Further, Jurisdictional officers were not satisfied with the fact that returns have been filed and challans have been paid by the petitioner.

4. Submissions made by the respondent before Hon’ble High Court of Allahabad

The court has granted time to respondents to obtain instructions. On the basis of instructions received and their analysis respondents states the following:-

1. Taxpayer has duly filed the GSTR-3B up to November 2019.
2. No dues are pending towards tax, late fee and interest.
3. A copy of the instructions so received are taken on record.

It is clear from the facts that case highlighted the callous manner from which the assessee has been harassed by the respondents.

5. Legal extracts

1. Section 29(2)(c) of Central Goods and Service Tax Act, 2017 is reiterated below:

“29. Cancellation of registration

…

(2)The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,–

..

(c)any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or”

2. Rule 23(1) of UP GST Rules, 2017 is reiterated below:

“23. Revocation of cancellation of registration-

1) A registered person, whose registration is cancelled by the proper officer on his own motion, may submit an application for revocation of cancellation of registration, in FORM GST REG-21, to such proper officer, within a period of thirty days from the date of the service of the order of cancellation of registration at the common portal, either directly or through a Facilitation Centre notified by the Commissioner:

…”

6. Interpretation by Hon’ble High Court.

Hon’ble High Court has noted following points:

1. As per Section 29 (2)(c), if the assessee fails to furnish the returns for a continuous period of six months then the proper officer may cancel the GST registration. However, as per Section 30, such person may apply for revocation of cancellation of GST registration.
2. As per Rule 23(1), a burden is cast upon the assessee to furnish returns and to ensure that the tax due is paid along with any interest, penalty and late fees. No additional burden is cast upon the assessee or the persons seeking revocation.
3. In the given case, the petitioner submitted that he has filed all pending GST returns and all dues are cleared. Therefore, onus was on the department to verify the correctness of the submission made by the petitioner.
4. Hon’ble High Court mentioned that the respondent has failed miserably to verify the facts from its own records and proceeded to issue SCN against application for revocation of cancellation of GST registration.
5. The manner in which the show cause notice has been issued is wholly unacceptable as there is no shortcoming recorded in the same on shortcoming on the part of the assessee. It is not conceivable as to what was required in the show cause notice.
6. It also clearly appears that serious quasi-adjudicatory functionaries were being discharged by persons who did not have a legally trained mind and were entrusted in discharging functions affecting huge revenues.
7. Therefore, the order passed by the respondent rejecting the application of the petitioner is wholly arbitrary and signifies the incapacity of a legally trained mind because there is no effort made by the officers to verify the correctness of the assertions given by the petitioner.
8. On the other hand, the Appellate Authority has also committed the same manifest arbitrariness in deciding the appeal, they have fails the whole purpose of  statutory appeal.
9. Further, instructions issued by the respondent clearly shows that all pending GST returns have been filed.
10. Hon’ble Court expressed its surprise that why this instructions could not be obtained at earlier levels and the callous attitude of the Department has resulted in the assessee being harassed by approaching one forum after the other and wasting his considerable financial resources as well as time.

7. Order of Hon’ble High Court

Considering the fact that department has accepted that all pending returns were filed in time and no dues are payable, therefore, order passed by Adjudicating Authority and Appellate Tribunal is liable to be set aside.