Ajoy Kumar Deb vs. Union Of INDIA And 2 Ors

Held

The Court held that while the cancellation of GST registration under Section 29(2)(c) of the CGST Act, 2017, for non-filing of returns for six months is permissible, the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, offers a remedy. This proviso allows for the dropping of proceedings if the person furnishes all pending returns and makes full payment of tax dues, along with applicable interest and late fees. The Court reasoned that cancellation of registration has serious civil consequences. Therefore, in the event the petitioner approaches the empowered officer by furnishing all pending returns and making full payment of tax dues, interest, and late fees, the officer has the authority to consider the application for restoration. The Court directed the petitioner to approach the concerned authority within two months for restoration of his GST registration, and if he complies with the requirements of the proviso to Rule 22(4), the authority shall consider the application and pass necessary orders in accordance with law within 60 days. The Court also clarified that the period under Section 73(10) of the CGST/SGST Act shall be computed from the date of this order, except for the financial year 2024-25, which will be as per Section 44. The petitioner will be liable for arrears of tax, penalty, interest, and late fees.

Facts

The petitioner, Ajoy Kumar Deb, proprietor of M/s JMB Traders, had his GST registration cancelled by the Superintendent of CGST, Silchar, on April 22, 2023, due to non-filing of GST returns for over six months. A show-cause notice dated March 2, 2023, was issued, which the petitioner claims was only uploaded to the GST portal and not physically served. He attributes his failure to respond and file returns to illness, which prevented him from accessing the portal. Upon recovering in late 2024, he found his registration cancelled. He subsequently cleared all pending returns up to April 2023, paying only late fees as no tax was due. His appeal to the Commissioner (Appeals) was dismissed for being filed beyond the prescribed limitation period, leading him to file this writ petition.

Key Issues

1. Whether the cancellation of GST registration under Section 29(2)(c) of the CGST Act, 2017, for non-filing of returns for six months, is valid when the show-cause notice was allegedly not physically served and the petitioner was incapacitated. Petitioner's arguments: The petitioner contends that the show-cause notice was not physically served but only uploaded on the GST portal, and he was unaware of it due to illness. He argues that this lack of proper communication, coupled with his medical condition, prevented him from responding. He further submits that he has since cleared all pending returns and paid applicable late fees, and is willing to comply with the proviso to Rule 22(4) of the CGST Rules, 2017. Revenue's arguments: The judgment does not explicitly record arguments made by the revenue or state. However, the cancellation order was passed by the Superintendent of CGST, Silchar, based on the petitioner's failure to file returns for a continuous period of six months, as per Section 29(2)(c) of the CGST Act, 2017, and Rule 22 of the CGST Rules, 2017.