M/S Surajit Karmakar And Anr vs. The Union Of INDIA And 3 Ors.

Held

The Court held that the cancellation of GST registration entails serious civil consequences. It noted that the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, allows for dropping proceedings if a person served with a show cause notice under Section 29(2)(c) furnishes all pending returns and makes full payment of tax dues, along with applicable interest and late fees. Citing a previous order in a similar case, the Court directed that the petitioners should approach the concerned authority within two months from the date of the order, seeking restoration of their GST registration. If they comply with all requirements as per the proviso to Rule 22(4), the authority should consider their application for restoration in accordance with the law and take expeditious steps for the same. The Court also clarified that the period stipulated under Section 73(10) of the CGST/SGST Act shall be computed from the date of the instant order, except for the financial year 2024-25, which will be as per Section 44. The petitioners are liable to pay arrears of tax, penalty, interest, and late fees.

Facts

The petitioners, M/S Surajit Karmakar and its proprietor Surajit Karmakar, are registered under the CGST Act, 2017. Their GST registration was cancelled by the Superintendent of Tax, Karimganj-3, via an order dated 03.06.2020, due to non-filing of GST returns for six consecutive months. The petitioners received a show cause notice dated 22.01.2020, but the proprietor, unfamiliar with online procedures, failed to file a reply within the stipulated 30 days. By the time they became aware of the notice and the subsequent order, the time for reply had expired. The petitioners subsequently updated all pending returns up to June 2020, paid all GST dues, late fees, and interest, and applied for revocation of cancellation, which was dismissed. Aggrieved, they filed a writ petition before the High Court.

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, can be dropped if the petitioner complies with the proviso to Rule 22(4) of the CGST Rules, 2017, by furnishing pending returns and making full payment of tax dues, interest, and late fees? Petitioner's contention: The petitioners argued that they are ready and willing to comply with all formalities as per the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017. They submitted that they have updated all pending returns and discharged all GST dues, including late fees and interest, and sought revocation of cancellation, which was dismissed. They relied on a previous order in WP(C) No.6366/2023 (Sanjoy Nath vs. The Union of India and others) where a similarly situated petitioner was granted relief. Revenue's contention: The judgment does not record any specific arguments made by the revenue or state.