M/S Monaksh Finance Private Limited vs. Union Of INDIA

Facts

M/s Monaksh Finance Private Limited (Petitioner) filed a writ petition challenging the order dated 10.07.2023, which cancelled its GST registration. The Petitioner, engaged in management and financial consulting, received a show cause notice on 09.05.2023 for failing to furnish returns for six continuous months. The impugned order was passed for non-filing of returns for two quarters. Subsequently, the application for revocation of cancellation was rejected on 21.08.2023, citing non-filing of returns for a subsequent quarter and outstanding interest on delayed tax deposit. The Petitioner contended that it had filed the returns and deposited tax with interest after the show cause notice, and the rejection of revocation for a subsequent default, which was also now complied with, was unjustified.

Held

The Court held that the impugned order dated 10.07.2023, cancelling the petitioner's GST registration, was a non-speaking order and was passed in a cursory manner, failing to consider the fact that the return for the quarter ending 31.03.2023 was filed on the same date as the impugned order. The order rejecting the revocation application on 21.08.2023 was based on two grounds: pending interest for delayed deposit and non-filing of the return for the quarter ending 30.06.2023. The Court noted that the second ground was not part of the original show cause notice. The Court found that the interest on the delayed deposit of tax for the two quarters had since been deposited. Consequently, the Court set aside both the cancellation order and the rejection of the revocation application. The matter was remitted back to the respondents to decide the proceedings afresh based on the show cause notice dated 09.05.2023, by passing a speaking order and considering the filing of returns and payment of interest. The respondents were directed to endeavor to decide the matter expeditiously due to the impact on the petitioner's business.

Key Issues

1. Whether the cancellation of GST registration for non-filing of returns for a continuous period of six months, when returns and interest have been subsequently filed and deposited, is legally sustainable, particularly when the impugned order is non-speaking and fails to consider compliance, turning on Section 29(2) of the CGST Act, 2017 and Rule 21 of the CGST Rules, 2017. 2. Whether the rejection of the application for revocation of GST registration on grounds not mentioned in the show cause notice, and without considering subsequent compliance, is valid, relating to the procedural fairness and the provisions governing revocation of registration. Petitioner's arguments: The Petitioner argued that after receiving the show cause notice, it filed the returns for the two quarters and deposited the tax along with interest, albeit belatedly. They contended that the revocation of cancellation should not have been rejected based on a subsequent default, which has since been rectified. Respondents' arguments: The Respondents defended the impugned order, stating that the Petitioner failed to furnish returns for over six months, deposited tax late, and did not pay the applicable interest. They also highlighted a default in filing returns for the quarter following the initial default.