Md. Salim Ahmed vs. Union Of INDIA And 3 Ors
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The petitioner, Md. Salim Ahmed, engaged in fish and fish feed trading, filed a writ petition challenging the cancellation of his GST registration by the Superintendent, Central Goods and Service Tax, Karimganj, Assam, on March 8, 2022. The cancellation was based on non-filing of statutory returns. The petitioner contended that due to severe financial losses caused by the COVID-19 pandemic, he defaulted in complying with the CGST Act, 2017. After the pandemic situation improved, he revived his business and filed returns up to July 2022. However, his subsequent applications for revocation of cancellation and appeal under Section 107 were rejected due to the lapse of prescribed time limits. He argued that the cancellation was punitive and would halt his business, his sole livelihood.
Held
The Court held that the purpose of limitation periods in statutes is to ensure compliance and protect third-party rights. In the case of GST registration cancellation, non-revocation prejudices only the assessee and does not create third-party rights. The Court found that no prejudice would be caused to the revenue by revoking the cancellation. In fact, it would be in the interest of the revenue to allow revocation, as it facilitates revenue collection. The Court noted that the petitioner's reasons for default were attributed to financial losses from the COVID-19 pandemic and that he had subsequently filed returns. The Court directed the Superintendent, Central Goods and Service Tax, Karimganj, Assam, to inform the petitioner of any outstanding statutory dues as of the cancellation date. Upon the petitioner depositing these dues, the authority was directed to restore the petitioner's GST registration. The Court disposed of the writ petition with these directions.
Key Issues
1. Whether the cancellation of GST registration is justified when the non-filing of returns was due to financial hardship caused by the COVID-19 pandemic, and subsequent returns have been filed? (Question of mixed law and fact, turning on Section 29 of the CGST Act, 2017 and Rule 23 of the CGST Rules, 2017). Petitioner's Arguments: The petitioner argued that the cancellation was not justified as the default was solely due to the unprecedented financial hardship caused by the COVID-19 pandemic. He emphasized that he has since filed all pending returns and that the cancellation is punitive, causing him irreparable harm by preventing him from continuing his business. He relied on the principle that the purpose of GST is revenue collection, and allowing revocation would facilitate this. Revenue's Arguments: The learned standing counsel for the GST fairly submitted that the writ petition could be disposed of in terms of directions issued by other Co-ordinate Benches in similar matters, acknowledging the existence of precedents.
Sections Cited
Section 29, Section 107, Rule 23
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Cause title — parties, addresses and appearances
ORDER Date : 03.02.2023 Heard Mr. R. S. Mishra, learned counsel for the petitioner. Also heard Mr. S. C. Keyal, learned standing counsel for the GST.
This writ petition is filed impugning the order dated 08.03.2022 respondent No. 4, namely, the Superintendent, Central Goods and Service Tax, Karimganj, Assam whereby the GST registration of the petitioner was cancelled in terms of the provisions of Section 29 of the Central Goods and Services Tax Act, 2017. 3. The petitioner is engaged in the business of trading of fish and fish feeds under the name and style “Md. Salim Ahmed” having its principle place of business at Kaliganj Bazar, Chargula, PWD Road, Karimganj, Assam. It is submitted that because of COVID-19 Pandemic, the business of the petitioner suffered severely and the petitioner sustained huge financial losses. It is submitted that owing to acute financial hardship of the petitioner, the petitioner had defaulted in complying with the provisions of the CGST Act, 2017 and, therefore, the statutory returns could not be filed on due dates. It is submitted that the petitioner was served with a show cause notice being Show Cause Notice bearing reference No. ZA1802220020765 dated 02.02.2022 whereby the petitioner was asked to furnish a reply to the said show cause notice within a period of seven working days from the date of receipt of the same. It is submitted that pursuant to the show cause notice, the GST registration of the petitioner was cancelled vide Order No. ZA1803220060066 dated 08.03.2022. 4. It is submitted by the petitioner that subsequently, after improvement of COVID-19 Pandemic situation, the petitioner revived his business and filed his returns upto July, 2022. After filing of such returns, the petitioner attempted to file
Page No.# 3/5 an application for revocation of the cancellation. However, since it was not filed within the prescribed period, the same could not be filed. An appeal under Section 107 against the cancellation of its GST registration also could not be filed because of lapse of the prescribed period. It is submitted by the petitioner that since the GST returns to the extent permitted by the portal has already been deposited, the cancellation of the GST registration is not justified as the same was on account of non-filing of GST returns due to the hardship faced by the petitioner because of COVID-19 Pandemic situations. The GST returns upto March, 2022 now having been filed, there is no necessity to disallow the revocation of the cancellation of GST registration in favour of the petitioner by the respondent authorities. The learned counsel for the petitioner submits that this action of the respondent authorities is punitive in nature and has the effect of putting the business of the petitioner to a complete halt as without the GST registration he is unable to continue with his business as it is his only source of his livelihood.
The learned standing counsel has fairly submitted that there are orders passed by the other Co-ordinate Benches in respect of the cancellation of GST registration and, therefore, this writ petition can also be disposed of in terms of similar directions.
The learned counsels for the parties have been heard and the pleadings on record have been duly perused. The orders passed by the Co-ordinate Bench of this Court in WP(C) No. 6232/2022 and WP(C) No. 6429/2022 have also been perused. In these two writ petitions, this Court had directed restoration of GST registration after deposit of all pending dues.
Under Rule 23(1) of the GST Rules of 2017 it is provided that no application for revocation shall be filed unless such returns are furnished and any amount due as tax in terms of such returns has been paid along with any amount
Page No.# 4/5 payable towards interest, penalty and late fee in respect of the said returns. The reasons for default on the part of the petitioner to submit its periodical returns as required under GST Act and the Rules, as pleaded in the present proceedings, are attributed to the financial losses suffered by the petitioner because of the COVID- 19 Pandemic situation. It is the further case of the petitioner that against the order of cancellation of its GST registration, no appeal could be preferred before the Appellate Authority under Section 107 of the GST Act, 2017 because of lapse of the time limit prescribed.
The purpose of limitation being prescribed in a statute is two fold, namely, to ensure compliance of the statutory provisions by the persons on whom the provisions of the statute are applicable and further to ensure that no third party rights which may have been created in the meantime are permitted to be non- suited/unsettled. Under the scheme of GST Act and Rules, the non-revocation of cancellation of GST registration is likely to prejudice the assessee alone. In cancellation of such GST registration for the reasons mentioned under the Section, it cannot be said that any third party rights are created against the assessee. No prejudice is caused to any other person, if the GST registration of the petitioner/assessee is revoked. No prejudice is caused to the revenue. Rather as discussed above, it will be in the interest of the revenue to permit the revocation of a cancellation of GST registration of an assessee like the petitioner so that it felicitates collection of revenue as mandated under the GST Regime.
It is directed that the respondent No. 4, namely, the Superintendent, Central Goods and Service Tax, Karimganj, Assam will intimate the petitioner the total outstanding statutory dues standing in the name of the petitioner till the date on which his GST registration was cancelled. Upon such intimation, if any such outstanding statutory dues under GST is required to be paid the same shall be deposited by the petitioner without fail. Upon such deposit of statutory dues under Page No.# 5/5 the GST Regime by the petitioner, the respondent Authority will proceed to restore the GST registration of the petitioner.
With this direction, the writ petition stands disposed of in terms of the above. No cost.
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.