M/S Rudra Steel vs. Principal Commissioner

Held

The Court acknowledged the admitted factual position that the cancellation was due to an inadvertent error by the petitioner's consultant. While Section 29(1) allows cancellation on the proper officer's motion or an application by the registered person, and Rule 22(1) mandates a notice in FORM GST REG-17, the Court noted that Section 30 of the GST Act specifically provides for revocation of cancellation only in cases where the cancellation was done on the proper officer's own motion. This creates a deliberate exclusion for cases where cancellation is based on the registered person's application. However, the Court found it anomalous that while the Department issues notices in cases initiated by them (as evidenced by the M/s Omkar Steel case), the petitioner, whose cancellation was also based on an application (albeit inadvertent), was not issued a notice. Given the newness of the GST Act and the potential for similar situations, the Court directed the petitioner to approach the GST Council for a clarification or guideline. The Court also directed the respondents to consider referring the petitioner's dispute to the GST Council and to consider why the petitioner was not issued a notice under Rule 22, unlike M/s Omkar Steel.

Facts

The petitioner, M/s Rudra Steel, registered under GST on November 21, 2017, filed its last return in September 2018. The petitioner's consultant, inadvertently, filed an application for cancellation of registration in the petitioner's name instead of M/s Omkar Steel, another client. The cancellation was accepted on October 16, 2018. The petitioner approached the respondents to revoke the cancellation, explaining the error, but the respondents refused. The petitioner contends that the cancellation was done without issuing a mandatory notice as required by Rule 22 of the Central GST Rules. The respondents argue that the GST Act and Rules do not empower them to revoke cancellations initiated by the registered person's application, citing Section 30 which only allows revocation for cancellations initiated by the proper officer.

Key Issues

1. Whether the cancellation of the petitioner's GST registration on October 16, 2018, is bad in law for non-compliance with the mandatory notice requirement under Rule 22(1) of the Central GST Rules, despite the cancellation being initiated by an application filed by the registered person (albeit inadvertently)? - Petitioner's argument: Rule 22(1) mandates a notice in FORM GST REG-17 before cancellation, regardless of whether the cancellation is on the Department's motion or an application by the registered person. The failure to issue such notice renders the cancellation illegal. - Revenue's argument: Section 30 of the GST Act empowers revocation only for registrations cancelled on the proper officer's own motion. The Act and Rules do not provide for revocation when cancellation is based on an application by the registered person. Therefore, the petitioner's request for revocation cannot be acceded to. 2. Whether the GST authorities have the power to revoke the cancellation of registration when such cancellation was effected on an application made by the registered person, even if made inadvertently?