Kushal Das vs. The State Of Assam And 4 Ors
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The petitioner, Kushal Das, a proprietor of a firm providing light motor vehicles to ONGCL on hiring, had a GST registration effective from May 17, 2018. The firm regularly filed GST returns until December 2019. Due to personal issues exacerbated by the COVID-19 pandemic and lockdown, returns were not filed. On November 19, 2019, the Assistant Commissioner of Central Goods and Service Tax, Sivasagar (Respondent No. 4), issued a show cause notice for cancellation of GST registration due to non-filing of returns for six months. The petitioner's GST registration was cancelled on December 3, 2019, for not submitting a reply. The petitioner filed an online appeal on November 3, 2022, before the Joint Commissioner of State Tax (Appeals), Jorhat (Respondent No. 3). The appellate authority issued another show cause notice on November 5, 2022, seeking clarification on tax payment, erroneous refunds, or wrong input tax credit. The appeal was subsequently rejected on November 22, 2022, on grounds of limitation.
Held
The Court held that it is in the interest of revenue for the petitioner to remain within the GST regime to comply with statutory obligations of tax payment. The Court noted that similar matters had been disposed of by this Court and other Co-ordinate Benches with directions to revoke cancellation of registration upon payment of all statutory dues. The Court found that the appellate authority's rejection of the appeal on limitation grounds was not serving the purpose of revenue collection. Exercising its inherent power as a Writ Court to condone delays, as established in Commissioner of Income Tax-15 –Vs- Pheroza Framroze and Company, the Court interfered with and set aside the impugned order of cancellation dated November 19, 2019, the order of the appellate authority dated December 3, 2019, and the appellate authority's order dated November 22, 2022. The Court directed the Assistant Commissioner of Central Goods and Service Tax, Sivasagar, to intimate the petitioner the total outstanding statutory dues until the cancellation date. Upon payment of these dues, the appellate authority is to re-decide the appeal on merits. The issue of the validity of the initial cancellation notice and the subsequent appeal rejection was decided in favor of the petitioner.
Key Issues
1. Whether the cancellation of GST registration for non-filing of returns, particularly in light of the COVID-19 pandemic and personal difficulties, was justified, and if the subsequent rejection of the appeal on grounds of limitation was appropriate, turning on the interpretation and application of relevant GST provisions concerning registration cancellation and appeals. Petitioner's arguments: The petitioner contended that the non-filing of GST returns was due to severe personal problems and the nationwide COVID-19 lockdown, which also caused significant financial losses to the business. The petitioner argued that the cancellation of registration and the subsequent rejection of the appeal on limitation grounds were not in the interest of revenue, as it would prevent the petitioner from complying with statutory obligations. The petitioner relied on the inherent power of a Writ Court to condone delays, citing the Supreme Court case of Commissioner of Income Tax-15 –Vs- Pheroza Framroze and Company. Revenue's arguments: The learned Standing Counsel for GST submitted that the Court had previously passed orders remanding similar matters back to the appellate authority for pre-deciding on merits. The revenue did not explicitly argue against the petitioner's contentions regarding the pandemic's impact or the merits of the appeal itself, but rather alluded to existing judicial precedent for similar cases.
Sections Cited
Section 73
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Cause title — parties, addresses and appearances
ORDER 17.03.2023 Heard Mr. R. S. Mishra, learned counsel for the petitioner. Also heard Mr. S. C. Keyal, learned standing counsel for the GST.
The petitioner firm deals with the business of providing light motor vehicle to ONGCL on hiring. The petitioner firm is represented by its proprietor, namely Sri Kushal Das. The petitioner firm has a GST Registration with effect from 17.05.2018 being Registration No. 18AHHPD5656M3ZV.
Pursuant to being registered under the GST, the petitioner firm was regularly submitted the GST returns till the month of December, 2019. Thereafter, several personal problems due to COVID19 Pandemic situation and lockdown throughout the entire country, the GST returns could not be submitted. Because of countrywide lockdown, the business suffered severe financial losses. On 19.11.2019, respondent No. 4 issued a Show cause notice on the petitioner to show cause as to why the GST should not be cancelled for not filing the returns for a continuous period of 6 months. The reply was Page No.# 3/5 directed to be submitted within 7 days from the date of service of notice.
It is submitted by the learned counsel for the petitioner that by order dated 03.12.2019 under reference No. ZA181219003495I, the GST registration of the petitioner was cancelled for not having submitted his reply to the Show cause notice. The effective date of cancellation was 03.12.2019. The petitioner was filed an appeal before the respondent No. 3 through online mode on 03.11.2022 against the cancellation of the GST registration. After filing of the appeal, the respondent No. 3 issued another show cause notice bearing No. ZDA1811220006413 dated 05.11.2022 seeking clarification on the following grounds: (i) You have not paid tax due completely; or (ii) Refund has been released erroneously; or (iii) Input tax credit has been wrongly availed for the order in appeal. However, the appeal filed by the petitioner came to be rejected by the appellate authority vide order dated 22.11.2022 on the ground of limitation.
Mr. S.C. Keyal, learned Standing counsel, GST submits that this Court had passed orders remanding the matter back to the appellate Authority for pre- deciding the matter on merits.
The learned counsels for the parties have been heard. Pleadings on record
Page No.# 4/5 have also been perused.
The petitioner is in the business of providing light motor vehicle to ONGCL on hiring. Under the GST regime, the petitioner is required to pay the necessary dues under the CGST or SGST as the case may be or both. The statutory dues are required to be paid by all entities who are registered under the GST regime. Such payments of statutory dues contribute towards the revenue collection by the Union. If the petitioner is not included within the GST regime, then any statutory dues that may be required to be deposited by the petitioner will not be deposited and which will not be in the interest of the revenue. Therefore, in order that the petitioner is required to comply with his statutory obligations of payment of taxes under the GST regime, it would be necessary for the departmental authorities to re-consider the prayer of the petitioner for revocation of his cancellation of GST registration.
It is submitted at the bar that there are several orders passed by this Court as well as other Co-ordinate Benches in similar matters whereby the matters have been disposed of with a direction to the respondent authority to revoke the cancellation of registration upon due payment of all statutory dues payable by the petitioners. In some matters as in the present proceedings, the assessee had approached the statutory appellate authority for redressal of their grievances which however was not redressed by the appellate authority and instead the appeals preferred were dismissed on the ground of limitation. This Court is of the view that since similar such orders have been passed by this Court as well as other Co-ordinate Benches, it will serve no purpose to keep the present writ petition pending and this present writ petition can also be disposed
Page No.# 5/5 of in terms of similar orders as had been done by the orders passed in W.P(C) No.4063/2023, W.P(C) No. 6175/2022, W.P(C) No. 576/2023 and ors.
A writ Court is empowered to condone the delay of any statutory or quasi judicial authority. Such power is inherent in a Writ Court [Commissioner of Income Tax-15 –Vs- Pheroza Framroze and Company, reported in (2017) 11 SCC 730]. Accordingly, the impugned order dated 19.11.2019 and the order of the Appellate Authority dated 03.12.2019 as well as order dated 22.11.2022 are hereby interfered with and set aside. It is directed that the Respondent No. 4, namely Assistant Commissioner of Central Goods and Service Tax, Sivasagar, Assam will intimate the petitioner the total outstanding statutory dues standing in the name of the petitioner till the date on which her GST registration was cancelled. Upon such intimation, if any such outstanding statutory dues under GST are required to be paid, the same shall be deposited by the petitioner without fail. Upon such payment of statutory dues under the GST by the petitioner, the appellate authority will re-decide the appeal on merits and pass appropriate order.
The impugned order dated 03.12.2019 passed by the appellate authority is set aside and the matter is remanded back to the appellate authority to comply with the directions as indicated above.
Accordingly, the writ petition stand disposed of. No order as to costs.
JUDGE Comparing Assistant
Reproduced from the public record of the Gauhati High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.