M/S. Viyan Traders vs. The Commercial Tax Officer

Held

The Court allowed the writ petition. It noted that the Petitioner could not respond to the show cause notice due to financial difficulties and that the cancellation order cited the Petitioner's failure to reply as the sole reason. While acknowledging that the Petitioner's cancellation date of 16.02.2023 fell outside the scope of Notification No. 03/2023-Central Tax (which applied to cancellations on or before 31.12.2022), the Court found merit in the Petitioner's situation, especially considering the pendency of extension considerations during that period. The Court also referred to the judgment in Tvl. Suguna Cut Piece's case as covering the issue. Therefore, the Court directed the Respondent to restore the Petitioner's GST registration. The Petitioner was subsequently directed to file all pending returns and pay taxes and penalties as per law. The Court explicitly stated that the Petitioner is entitled to the benefit, implying a favorable decision on both issues raised.

Facts

M/s. Vijayan Traders (Petitioner) filed a writ petition challenging the cancellation of its GST registration by the Commercial Tax Officer, Madurai Rural (West) Assessment Circle (Respondent). The cancellation was effective from 31.12.2022, with the impugned order dated 20.03.2023. The Petitioner stated that it failed to file returns continuously for six months due to financial crisis. Upon recovery, it attempted to file returns and pay dues, but found its registration cancelled. The Petitioner could not file a reply to a system-generated show cause notice. The Petitioner also contended that while a Government Notification (03/2023-Central Tax) extended time for taxpayers whose cancellation was on or before 31.12.2022, its cancellation occurred on 16.02.2023, thus excluding it from the benefit of this notification. The Petitioner expressed willingness to pay GST and late fees if registration is revoked.

Key Issues

1. Whether the Petitioner is entitled to have its GST registration revoked despite the cancellation order dated 20.03.2023, considering the Petitioner's inability to respond to the show cause notice due to financial crisis and subsequent cancellation? 2. Whether the Petitioner can avail the benefits of Notification No. 03/2023-Central Tax dated 31.03.2023, even though its GST registration was cancelled on 16.02.2023, which is after the stipulated date of 31.12.2022? Petitioner's arguments: The Petitioner argued that it could not reply to the web portal-generated show cause notice due to its financial crisis and that the cancellation order was bereft of details. It 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) which condoned delays in revoking GSTN registration. The Petitioner also pointed out that the cancellation date (16.02.2023) fell outside the scope of Notification No. 03/2023-Central Tax, despite the Petitioner being willing to pay dues and late fees. Respondent's arguments: The Respondent stated that the registration was cancelled suo motu as the Petitioner failed to respond to the show cause notice within the stipulated time.