M/S.Yaghneshwar Logistics vs. The Additional Commissioner

Held

The Court held that the issue was squarely covered by a recent decision of the same Court in M/s. Chenna Krishnama Charyulu Karampudi v. Additional Commissioner (Appeals-1). In that case, the Court acknowledged that while a lower appellate authority might be right in holding that an appeal beyond the initial three months, even with an extended period of one month, cannot condone further delay, such a stand could adversely affect the petitioner. This is particularly true when GST registration is cancelled suo motu for non-filing of returns, and a GST Tribunal has not yet been constituted, leaving the petitioner without a remedy. The Court found it just and proper to remand the entire matter back to Respondent No. 2 to reconsider the petitioner's case and pass an appropriate order in accordance with the law. The Court set aside the orders of both Respondent No. 2 and Respondent No. 1 without expressing any opinion on the merits of the case. The petitioner was directed to submit all returns as per the statute during the reconsideration by Respondent No. 2.

Facts

The petitioner, M/s. Yaghneshwar Logistics, a proprietary firm engaged in courier agency services, had its GST registration cancelled by Respondent No. 2 on October 5, 2021. This cancellation was based on a show cause notice issued on September 2, 2021, citing failure to furnish returns for a continuous period of six months. The petitioner claims to have submitted a reply on October 3, 2021, explaining the reasons for non-filing. Subsequently, the petitioner filed an appeal before Respondent No. 1, which was dismissed on August 18, 2022, on the grounds of belated filing. The petitioner has approached the High Court seeking to quash these orders and declare the cancellation arbitrary and illegal.

Key Issues

1. Whether the action of Respondent No. 2 in cancelling the GST registration of the petitioner on a suo motu basis is arbitrary, illegal, and contrary to law, considering the petitioner's explanation for non-filing of returns? (Question of law and fact, turning on Section 29(2) of the CGST Act, 2017 and relevant rules). 2. Whether the order passed by Respondent No. 1 dismissing the appeal on the ground of belated filing is sustainable, especially in light of the petitioner's grievance regarding the cancellation of GST registration and the absence of a GST Tribunal? Petitioner's Arguments: The petitioner argued that the cancellation of GST registration was arbitrary and illegal. They contended that they had provided an explanation for the non-filing of returns. Furthermore, they highlighted that the appeal was dismissed on technical grounds of delay, and given the absence of a GST Tribunal, they would be left without a remedy. They relied on the principle that the matter should be reconsidered on merits. Respondents' Arguments: The judgment does not record any specific arguments made by the respondents. It notes that learned counsel for the respondents appeared.