Atlafbhai Rajabali Dosani, Prop. Of M/S Gurukrupa Enterprise vs. Superintendent, Ghatak 82(Amreli), Ragne 19, Division 9

Held

The Court held that the order of cancellation of registration dated 18.03.2021 and the appellate order dated 31.01.2022 were liable to be quashed and set aside. The Court noted that the show cause notice was cryptic and lacked detail. While acknowledging the petitioner's failure to respond to the notice and file returns, the Court considered his subsequent actions: filing all pending returns from September 2018 to March 2021, paying Rs. 2,94,520/- towards late fees and self-assessed taxes, and providing an undertaking to fulfill future obligations. The Court also took into account the period of the pandemic and the Supreme Court's orders extending limitation periods. The Court found that restoring the registration would not prejudice the revenue but would facilitate adjudication. The ratio decidendi is that where an assessee demonstrates genuine intent to comply, has rectified past non-compliance by filing returns and paying dues, and provides an undertaking for future compliance, the GST registration should be restored, especially when the cancellation order was procedurally deficient and the period involved included the pandemic. The Court directed the respondents to forthwith restore the petitioner's registration, directed the petitioner to file GSTR-1 within 15 days of restoration, and ordered the authority to complete the assessment within six weeks.

Facts

The petitioner, Atlathbhai Rajabali Dosani, proprietor of M/s Gurukrupa Enterprise, a contractor providing construction services, failed to file GST returns from September 2018 onwards, believing no returns were necessary due to zero outward supply. He was issued a show cause notice on 22.06.2020 for cancellation of registration under Section 29(2)(c) read with Rule 22 of the CGST Act due to continuous non-filing of returns for six months. His registration was cancelled on 18.03.2021. The petitioner appealed this cancellation to the Commissioner (Appeals), who upheld the cancellation on 31.01.2022, stating it was obligatory to file all returns. The petitioner subsequently filed all pending returns from September 2018 to March 2021, paid late fees and self-assessed taxes totaling Rs. 2,94,520/- in March 2022, and made a representation for restoration, which was not heeded, leading to the present petition.

Key Issues

1. Whether the order cancelling the petitioner's GST registration under Section 29(2) of the CGST Act, 2017, and the subsequent appellate order upholding it, are liable to be quashed and set aside, particularly considering the petitioner's explanation for non-filing and subsequent compliance. Petitioner's arguments: The petitioner contended that his non-filing of returns was due to a misunderstanding by his consultant and the belief that zero outward supply necessitated no returns. He emphasized his keenness to continue business, his payment of all outstanding taxes and late fees (Rs. 2,94,520/-), and his undertaking to pay any further dues. He relied on the principle that the State should not thwart business prospects and sought restoration of his registration. Revenue's arguments: The Revenue argued that the petitioner was not vigilant, failed to respond to the show cause notice, and that both the adjudicating authority and the appellate authority had concurrently held against him. They expressed apprehension that allowing lethargic assessees to wake up after a long time could be deleterious to the system.