Mohammad Aarif Iqbal vs. Joint Commissioner( Appeals)

Held

The Court upheld the order of cancellation of registration but made it prospective from the date of the order, i.e., 25.06.2021. The Court reasoned that while the Jurisdictional Officer could not be blamed for the delayed processing due to a technical glitch, the petitioner also could not be blamed for continuing business under the old registration, particularly since his application for a new registration was rejected on the ground that the earlier one was valid. The fact that the Department processed the returns filed by the petitioner until the date of cancellation further supported this view. The Court directed the petitioner to file returns for the remaining period up to 25.06.2021, which were to be processed by the department treating the registration as valid until that date. The issue of limitation for the appeal was implicitly set aside by this substantive relief.

Facts

The petitioner, Mohammad Aarif Iqbal, sought cancellation of his GST registration on 17.08.2019, stating discontinuation of business. This application was not processed by the Jurisdictional Officer until 25.06.2021, when the registration was cancelled retrospectively from 17.08.2019. The petitioner had, in the interim, applied for a fresh registration on 04.09.2019, which was rejected on the grounds that his earlier registration was still valid. Consequently, the petitioner continued business under the existing registration and filed returns, which were processed by the Department. The appeal against the retrospective cancellation was dismissed by the Joint Commissioner (Appeals) solely on the ground of limitation. The petitioner impugns this dismissal order.

Key Issues

1. Whether the order of cancellation of GST registration, dated 25.06.2021, which was made retrospective from 17.08.2019, is valid, considering the petitioner continued business and filed returns under the belief that the registration was valid due to the delay in processing the cancellation application and the rejection of his fresh registration application. (Mixed question of law and fact, concerning the interpretation and application of relevant GST provisions). Petitioner's arguments: The petitioner contended that he continued business and filed returns under the impression that his application for cancellation was deemed rejected or that his registration was suspended, especially since his application for a fresh registration was rejected on the basis of the validity of the earlier one. He argued that the retrospective cancellation caused prejudice as returns were processed and input tax credit was availed by him and his customers without departmental protest. Revenue's arguments: The respondent submitted that the petitioner's cancellation application was not reflected on the Jurisdictional Officer's dashboard until 2021 due to a technical glitch. They argued that the officer had no option but to cancel the registration from the date of the application once it was processed, as there was no provision to alter the cancellation date. They also referred to Rule 21-A of the CGST Rules, 2017, regarding automatic suspension of registration.