Md. Muhibbullah 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 Section 29(2)(c) of the Act empowers the cancellation of registration for non-furnishing of returns for six months, and Rule 22 of the CGST Rules, 2017, lays down the procedure. Specifically, the proviso to sub-rule (4) of Rule 22 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 updated all pending returns and discharged all his GST dues, interest, and late fees. Therefore, the Court directed that the petitioner should approach the concerned authority within two months from the date of the order seeking restoration of his GST registration. If the petitioner complies with all requirements as per the proviso to Rule 22(4), the authority should consider the application for restoration in accordance with law and take necessary steps for expeditious restoration. 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.

Facts

The petitioner, Md. Muhibbullah, operating "Hotel Haris", is registered under the CGST Act, 2017/AGST Act, 2017. Due to illness, he failed to file GST returns for six consecutive months. Consequently, he received a show cause notice dated 06.06.2023. He could not reply within the stipulated period as he discovered the notice after the deadline had passed and an ex-parte order had been uploaded. The Superintendent, Guwahati C-4, passed an order dated 19.04.2024 cancelling his GST registration without assigning reasons. The petitioner subsequently updated all pending returns up to April 2024, paid all dues including late fees and interest, but could not file an application for revocation of cancellation as the 270-day 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, for non-furnishing of returns for a continuous period of six months, was justified, considering the petitioner's inability to respond to the show cause notice due to illness and subsequent compliance with pending returns and dues. Petitioner's contention: The petitioner argued that his illness prevented him from filing returns and responding to the show cause notice. He has since rectified all pending returns and paid all tax dues, interest, and late fees. He relies on 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 dues are paid. Revenue's contention: The judgment does not record any specific arguments made by the revenue or state.