Sri Mohanraj vs. Assistant Commissioner Of Commercial Taxes

Held

The Court allowed the petition. It quashed the Order of Cancellation of Registration dated March 16, 2024, and granted the petitioner an opportunity to file a response to the Show Cause Notice dated September 5, 2023. The Court considered the petitioner's financial constraints, his cessation of business from April 2023, and his willingness to pay all taxes, penalties, and interest, and to file the necessary returns. The Court directed the petitioner to file his response along with a certified copy of the order with the first respondent by November 11, 2026. The first respondent was then called upon to consider the response, filed returns, and the petitioner's willingness to settle dues before passing a just order. The Court's reasoning was influenced by the fact that the petitioner had not been properly put on notice regarding the Show Cause Notice, and the petitioner's subsequent willingness to comply with all requirements.

Facts

The petitioner, proprietor of M/s. Yogith Metals, was granted GST registration on February 14, 2022. He filed returns from March 2022 to January 2023. Due to financial constraints, he could not file returns for February and March 2023 and ceased business operations from April 2023. He failed to verify the GST portal for a Show Cause Notice dated September 5, 2023, issued by the Assistant Commissioner of Commercial Taxes for cancellation of registration, and a subsequent Order of Cancellation of Registration dated March 16, 2024. The cancellation was based on the alleged violation of Rule 21(d) of the CGST Rules, 2017, specifically for not filing a bank account as required by Rule 10A of the CGST Rules, 2017, prior to filing the first return.

Key Issues

1. Whether the cancellation of GST registration is liable to be quashed due to procedural irregularities and lack of proper notice to the petitioner, concerning the alleged violation of Rule 21(d) read with Rule 10A of the CGST Rules, 2017? The petitioner argued that he was not aware of the Show Cause Notice and the cancellation order due to his unfamiliarity with the GST portal. He contended that he can now produce bank statements, pay all demands including penalty and interest, and file the pending returns. The petitioner sought an opportunity to respond to the Show Cause Notice and resume business. The Revenue, through the High Court Government Pleader, acknowledged that the petitioner had not been properly put on notice regarding the Show Cause Notice dated September 5, 2023, concerning the alleged failure to file a bank account as required under Rule 10A of the CGST Rules before filing the first return.