Case Note & Summary
The petitioner, a proprietary firm engaged in fabrication work, was registered under the Central Goods and Services Tax Act, 2017 and Maharashtra State Goods and Services Tax Act, 2017. Due to the proprietor undergoing angioplasty and financial setbacks during the pandemic, the firm failed to file GST returns from August 2021. The State Tax Officer issued a show cause notice on 28-02-2022 suspending the registration and calling for explanation within 7 working days. The petitioner replied on 03-03-2022 citing financial crunch and requesting revocation. However, the officer cancelled the registration with effect from 21-08-2021 vide order dated 14-03-2022. The petitioner's application for revocation was also rejected. The petitioner then filed a writ petition under Article 226 of the Constitution challenging the cancellation and seeking restoration. The court observed that the show cause notice did not provide sufficient opportunity and the cancellation was disproportionate. Since the petitioner had filed all pending returns and paid tax, the court quashed the cancellation orders and directed the respondents to restore the registration within two weeks, subject to the petitioner filing returns and paying tax.
Headnote
A) Goods and Services Tax - Cancellation of Registration - Section 29(2) of Central Goods and Services Tax Act, 2017 - Show Cause Notice - The petitioner's registration was cancelled for non-filing of returns from August 2021. The court held that the show cause notice must provide adequate opportunity and the cancellation must be proportionate. Since the petitioner had filed returns and paid tax, the cancellation was set aside. (Paras 1-10) B) Goods and Services Tax - Revocation of Cancellation - Section 30 of Central Goods and Services Tax Act, 2017 - Opportunity of Hearing - The court directed the respondents to consider the petitioner's application for revocation and restore registration subject to filing of returns and payment of tax. (Paras 10-12)
Issue of Consideration
Whether the cancellation of GST registration under Section 29(2) of the CGST Act for failure to file three consecutive returns is valid when the petitioner had medical and financial reasons and subsequently filed returns.
Final Decision
The court quashed the order dated 14-03-2022 cancelling registration and the order dated 28-02-2022 suspending registration. Directed respondents to restore the registration within two weeks, subject to petitioner filing all pending returns and paying tax.
Law Points
- Cancellation of GST registration under Section 29(2) of CGST Act for non-filing of returns must be proportionate
- show cause notice must provide adequate opportunity
- registration can be revoked if returns are filed and tax paid.
