Tahura Enterprise vs. Union Of INDIA

Facts

The writ-applicants, Tahura Enterprise, engaged in trading iron and steel scrap, had their GST registration cancelled on July 10, 2019, by the respondent authority for non-filing of returns. The proprietor, being uneducated and a small-scale trader, faced financial difficulties preventing tax payment and thus return filing. They were not physically served the cancellation order. Believing they could only file returns after paying dues, they delayed filing a restoration application. The Covid-19 pandemic further impacted their business and the proprietor's health. In July 2021, they managed to pay outstanding taxes and filed a restoration application, which was treated as an appeal. The appellate authority dismissed this on September 14, 2021, deeming it time-barred.

Held

The Court held that the writ-applicants are entitled to relief. It noted that the cancellation of registration was solely for non-filing of returns due to non-payment of tax, stemming from financial constraints. The Court acknowledged the CBIC order extending the time limit for filing restoration applications for cancellations made on or before June 12, 2020, with the limitation period commencing from August 31, 2020. Crucially, the Court found that the Supreme Court's orders extending the period of limitation due to the Covid-19 pandemic would apply to quasi-judicial proceedings like the application for revocation of cancellation. Since the writ-applicants filed their application in July 2021 and paid the outstanding tax on September 6, 2021, both events occurred during the subsistence of the Supreme Court's orders extending limitation. Therefore, the appellate authority's dismissal on grounds of limitation was incorrect. The Court quashed the impugned order of cancellation and directed the respondents to forthwith restore the registration certificate.

Key Issues

1. Whether the time limit for filing an application for revocation of GST registration cancellation, where the cancellation order was passed prior to June 12, 2020, should commence from August 31, 2020, as per the Central Board of Indirect Taxes and Customs (CBIC) order? 2. Whether the period of limitation for filing applications/proceedings should be extended due to the Supreme Court's orders in view of the Covid-19 pandemic, and if so, how does this extension apply to the writ-applicants' restoration application? Petitioner's Arguments: The petitioner argued that the CBIC order dated June 25, 2020, extended the time for filing restoration applications for cancellations made up to June 12, 2020, with the limitation period commencing from August 31, 2020. They further contended that the Supreme Court's suo motu orders extending limitation due to Covid-19, particularly the exclusion of the period from March 15, 2020, to February 28, 2022, and providing 90 days from March 1, 2022, for expired limitations, should apply. Their application in July 2021 and tax payment on September 6, 2021, occurred within this extended period. The non-filing was due to genuine financial constraints, which have now been resolved. Respondent's Arguments: The respondent relied on their affidavit-in-reply and argued that the Supreme Court's order extending the period of limitation would not be applicable to an application for restoration of registration.