M/S. Aaradhana Homes vs. The Commercial Tax Officer

Held

The Court allowed the writ petition. The Court noted that the petitioner could not reply to the show cause notice because it was issued on the web portal and the petitioner was experiencing financial difficulties. The Court acknowledged that while Notification No. 03/2023-Central Tax dated 31.03.2023 extended time for taxpayers whose cancellations were on or before 31.12.2022, the petitioner's cancellation on 16.02.2023 fell outside this period. However, the Court found that the petitioner was entitled to the benefit, considering the circumstances and the pendency of the extension consideration during that period. The Court also found the issue covered by the judgment in Tvl. Suguna Cut Piece's case. The respondent was directed to restore the petitioner's GST registration. Following restoration, the petitioner was directed to file returns and pay tax and penalty as per law. The ratio decidendi is that a taxpayer facing genuine financial hardship and unable to respond to a web-based show cause notice, and whose cancellation date is proximate to an amnesty scheme's cut-off, may be granted relief by the High Court, especially when supported by precedent.

Facts

The petitioner, M/s. Aaradhana Homes, represented by its Proprietor V. Ramamoorthy, filed a writ petition seeking to quash the cancellation order dated 24.02.2023, passed by the respondent, the Commercial Tax Officer, Melur Assessment Circle, Madurai. The petitioner's GST registration (GSTIN/UIN. 33ALXPR3833JIZH) was cancelled. The petitioner stated that the cancellation occurred due to non-filing of returns for six months owing to financial crisis. Upon recovery, the petitioner attempted to file returns and pay dues but found the registration cancelled from 01.04.2022. The petitioner could not file a reply to a system-generated show cause notice. The petitioner also noted that the cancellation date (16.02.2023, as per paragraph 9 of the order) fell outside the scope of Notification No. 03/2023-Central Tax dated 31.03.2023, which extended time for taxpayers whose cancellations were on or before 31.12.2022.

Key Issues

1. Whether the cancellation of the petitioner's GST registration by the respondent is liable to be quashed, considering the petitioner's inability to respond to a system-generated show cause notice due to financial crisis and subsequent attempts to regularize compliance. 2. Whether the petitioner is entitled to the benefit of the extension of time provided under Notification No. 03/2023-Central Tax dated 31.03.2023, despite the cancellation date of their registration falling after the stipulated deadline. Petitioner's arguments: The petitioner contended that they could not reply to the show cause notice as it was issued on the web portal and they were facing financial difficulties. They relied on the Supreme Court's exclusion of the period from 13.03.2020 to 28.02.2022 for limitation purposes and a Madras High Court judgment in Tvl. Suguna Cut piece Vs Appellate Deputy Commissioner (ST) (GST) that condoned delays in revoking cancelled GSTN registrations. They also argued that while Notification No. 03/2023 extended time, their cancellation date of 16.02.2023 fell outside its purview, but they were entitled to relief. They expressed willingness to pay GST and late fees upon restoration. Respondent's arguments: The respondent's order cited the petitioner's failure to respond to the show cause notice within the stipulated time as the reason for suo motu cancellation.