Nayan Jyoti Sharma vs. The Union Of INDIA And 2 Ors

Held

The Court held that the cancellation of GST registration entails serious civil consequences. It noted that the petitioner's registration was cancelled under Section 29(2)(c) of the Act for non-furnishing of returns for six months. The Court considered the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, which allows for dropping proceedings if pending returns are furnished and tax dues, along with interest and late fees, are paid. The Court found that the petitioner had subsequently complied with these requirements. Therefore, the Court directed the petitioner to approach the concerned authority within two months seeking restoration of his GST registration. If the petitioner complies with all requirements as per the proviso to Rule 22(4), the authority shall consider the application for restoration expeditiously. The Court also clarified that the period under Section 73(10) of the CGST/SGST Act shall be computed from the date of the order, except for the financial year 2024-25, which will be as per Section 44. The petitioner is liable to pay arrears of tax, penalty, interest, and late fees.

Facts

The petitioner, Nayan Jyoti Sharma, operating as "Kaashwi Drug Distributor", is registered under the CGST Act, 2017. Due to non-filing of GST returns for six months, he received a show cause notice dated 08.07.2024 from the Superintendent, Central Goods and Services Tax, Dibrugarh-1 Range. The petitioner claims non-receipt of the notice due to miscommunication with his tax consultant. Subsequently, an order dated 19.08.2024 was passed by the Superintendent, cancelling his GST registration without assigning reasons. The petitioner has since updated all pending returns up to June 2024 and paid all dues, including late fees and interest. However, he could not file an application for revocation of cancellation as the prescribed time limit had expired.

Key Issues

1. Whether the cancellation of the petitioner's GST registration under Section 29(2)(c) of the CGST Act, 2017, is liable to be set aside or modified, considering the petitioner's subsequent compliance and the proviso to Rule 22(4) of the CGST Rules, 2017? The petitioner argued that due to miscommunication with his tax consultant, he was unaware of the show cause notice and consequently could not submit a reply. He further contended that he has since updated all pending returns and paid all dues, including late fees and interest. He also highlighted that the time limit for filing a revocation application had expired. The petitioner relied on the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, stating his readiness to comply with its requirements. The petitioner also referred to a previous order in WP(C) No. 6366/2023 (Sanjoy Nath vs. The Union of India & Ors.) where a similarly situated petitioner was granted relief. The respondents, represented by the Standing Counsel, CGST, did not record specific arguments in the judgment.