The Hon’ble High Court of Karnataka vide its order dated 10.11.2022 in the matter of M/s Nagson and Co. Vs. The Joint Commissioner of Central Tax (Appeals – II) Bengaluru, The Superintendent of Central Tax GST Bengaluru in Writ Petition No. 21341/2022 (T-RES), ordered for restoring the GST registration of the assessee, which was cancelled on account of delay in payment of taxes and non-filing of returns due to financial constraint and COVID – 19 Pandemic.  The appeal filed against the said cancellation of registration was also dismissed as being time-barred by the appellate authority, stating that he does not have the power to condone the delay beyond the time limit prescribed under Section 107 of the CGST Act, 2017.

The Petitioner filed the writ petition before the Hon’ble High Court praying for quashing the impugned Order-in-Appeal No. 185/2022-23/JC-AII/GST, dated 29.09.2022 passed by Respondent No.1 and to direct Respondent No.2 to revoke the cancellation of the GST registration of the Petitioner.

Petitioner’s Submissions: –

• That referring to the material on record, it was submitted on the behalf of the petitioner that due to financial constraints and also due to COVID – 19 Pandemic, petitioner could not make the GST payments on time, which led to issuance of show cause notice dated 13.12.2019 and the subsequent order dated 28.12.2020 being passed by the respondent No. 2 cancelling the GST registration of the petitioner.
• It was submitted that against the said cancellation of registration order, the appellant preferred an appeal before the Respondent No. 1, specifically contending that the delay on the part of the petitioner for non-payment of dues, non-filing of returns and preferring an appeal within the prescribed period was on account of financial constraints and due to covid-19 pandemic. Therefore, the delay in preferring the appeal deserves to be condoned.
• However, the Appellate authority by the impugned order dated 29.09.2022, dismissed the appeal filed by the petitioner refusing to condone the delay in preferring the appeal. The Appellate authority while dismissing the appeal, stated in the order that he does not have the jurisdiction to condone the delay beyond the prescribed period and the condonable period as provided under Section 107.
• Referring to the decisions of Practice Strategic Communications vs. The Commissioner of Service Tax – ILR 2016 KAR 4493; Simplex Infrastructure Limited vs. Joint Commissioner of Central Tax – W.A.No.942/2021 dated 03.12.2021 and M/s. Himalaya Drug Company vs. Commissioner of Central Tax – W.P.No.10142/2021 dated 08.09.2022, it was submitted that though it is beyond the jurisdiction of the appellate authority to condone the delay in filing of the appeal, this Court can condone the delay exercising its powers under Article 226 of the Constitution of India.

On the other hand, it was submitted on the behalf of the respondents that there is no merit in the writ petition and the same is liable to be dismissed.

Held: –

• The Hon’ble Court after considering the submissions and facts of the case, found that it has been rightly contended on the behalf of the petitioner that though the appellate authority does not have the jurisdiction to condone the delay in preferring the appeal under Section 107 of the CGST, it is open for this Court to condone the delay by exercising its powers under Article 226 of the Constitution of India.
• It was found that in the instant case it is the specific averment of the petitioner that due to financial constraints and covid-19 pandemic and on account of bonafide reasons, unavoidable circumstances and sufficient cause, it was not possible for him to not only file the GST returns and make payment within the stipulated time, but also could not prefer the appeal within the prescribed period.
• Thereafter, the Hon’ble Court accepting the aforesaid explanation offered by the petitioner and by adopting a justice-oriented approach, set aside the impugned orders.

The Hon’ble Court with the above findings, allowed the writ petition by setting aside the impugned orders dated 29.09.2022 & 28.12.2020 passed by Respondent No. 1 & No. 2 respectively. The petitioner is also permitted to file GST returns which shall be allowed by the respondents, subject to the petitioner paying all outstanding dues to the respondents within a period of one month from today.  Further It was made clear that in the event, the dues are not paid within a period of one month from today, the directions issued in the present order would not be available to the benefit of the petitioner.

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