Mohamed Nainar Salamath vs. The Superintendent Of CGST And C.Excise

Held

The Court allowed the writ petition, quashing the cancellation order dated 27.01.2023 and directing the respondent to restore the petitioner's GST registration. The Court reasoned that while the petitioner's cancellation date of 12.01.2023 fell outside the scope of Notification No.03/2023-Central Tax (which extended time for cancellations on or before 31.12.2022), the petitioner's case was pending consideration during the period of extension. The Court found the issue to be covered by the judgment in Tvl. Suguna Cut Piece's case. The Court also noted the petitioner's explanation that the show cause notice was not received, and that he had submitted a reply upon learning of it. The ratio decidendi is that where a taxpayer provides a reasonable explanation for non-compliance, especially concerning non-receipt of notices, and demonstrates willingness to comply, the GST authorities should consider restoration, particularly in light of judicial precedents and government schemes aimed at addressing such issues.

Facts

The petitioner, Mohamed Nainar Salamath, proprietor of M/s. Abban Construction Company, filed a writ petition seeking to quash the cancellation of his GST registration (No. 33AJIPS9491G3ZM) by the Superintendent of CGST and C. Excise, Kodaikanal, via an order dated 27.01.2023. The cancellation was based on the petitioner's failure to file GST returns for six months. The petitioner contended that his accountant, who was instructed to file NIL returns, failed to do so due to ill health. The petitioner only became aware of the cancellation when informed by other taxpayers. He argued that the show cause notice dated 08.10.2022 was issued to his Chartered Accountant and not received by him. He submitted a reply on 08.11.2022, but it was not accepted. The petitioner also cited the Supreme Court's exclusion of the period from 13.03.2020 to 28.02.2022 for limitation in suo motu petitions and a Madras High Court judgment in Tvl. Suguna Cut piece Vs Appellate Deputy Commissioner (ST) (GST) that condoned delays in revoking cancellations. He further noted that Notification No.03/2023-Central Tax dated 31.03.2023 extended time for taxpayers whose cancellations were on or before 31.12.2022, a benefit he could not avail as his cancellation was on 12.01.2023.

Key Issues

1. Whether the cancellation of the petitioner's GST registration was illegal and arbitrary, warranting quashing and revocation, considering the petitioner's explanation for non-filing of returns and non-receipt of the show cause notice? (Issue of mixed law and fact, turning on principles of natural justice and procedural fairness under GST law). Petitioner's Arguments: - The petitioner did not receive the show cause notice dated 08.10.2022, as it was sent to his Chartered Accountant's email. - The non-filing of returns was due to the accountant's ill health and failure to follow instructions to file NIL returns. - The impugned order is bereft of details. - The petitioner is entitled to the benefit of the period excluded for limitation by the Supreme Court and the relief granted in Tvl. Suguna Cut piece's case. - The petitioner is willing to pay GST, late fees, and penalties upon restoration of registration. Respondent's Arguments: - The respondent did not file a counter-affidavit or present arguments in the judgment. The cancellation order cited the petitioner's failure to respond within the stipulated time.