Abul Hussain vs. The State Of Assam And 4 Ors

Facts

The petitioner, Abul Hussain, challenged an order dated 02.06.2022 that cancelled his GST registration. He filed an appeal against this cancellation order, but it was rejected on 05.11.2022 as time-barred. The petitioner contended that the cancellation was due to non-filing of returns, which he had since rectified by filing the returns for the relevant period. He argued that further action would cause him prejudice and hardship, while serving no fruitful purpose for the Department. The respondents, represented by the Standing Counsel, Taxes, argued that the rejection of the appeal on grounds of limitation was in accordance with the law.

Held

The Court held that the cancellation of the petitioner's GST registration was primarily due to the non-submission of returns for a particular period. Since the petitioner had rectified this default by filing the returns, the Court directed that if the petitioner has indeed filed the returns, the order of cancellation should be revoked by the authorities, and the GST registration should be reinstated. This direction is conditional upon the prior filing of the returns. The Court further clarified that the filing of returns must be accompanied by all statutory dues and/or penalties. The ratio decidendi is that where a default leading to cancellation of GST registration is rectified by the taxpayer, and the rectification is demonstrated by filing the returns, the cancellation order should be revoked, subject to payment of dues and penalties, even if the appeal against cancellation was initially rejected on limitation grounds.

Key Issues

1. Whether the rejection of the petitioner's appeal against the cancellation of GST registration on the ground of being time-barred is legally sustainable, considering the petitioner has since filed the returns for the period in question? (Question of law and fact, turning on principles of natural justice and the intent of GST legislation regarding rectifiable defaults). Petitioner's arguments: The petitioner argued that since the sole reason for cancellation was non-filing of returns, and he has subsequently filed these returns, the cancellation order should be revoked. He contended that continuing with the cancellation would cause him grave prejudice and hardship, and that the department would not benefit from it. The petitioner implicitly argued that the strict application of limitation for the appeal would lead to an unjust outcome given the rectification of the default. Revenue's arguments: The respondent State of Assam, through its Standing Counsel, argued that the rejection of the appeal on the ground of limitation was in accordance with the prescription of law. They did not present arguments on the merits of the cancellation itself, focusing solely on the procedural bar of the appeal.