13.12.2022: Registration Not To Be Cancelled Solely On The Ground Of Delay In Moving The Revocation Application – Allahabad High Court

Allahabad High CourtThe Hon’ble High Court of Allahabad vide its order dated 25.11.2022 in the matter of Umesh Kumar Vs. State of U.P. and 3 Others in Writ Tax No. 648 of 2021, set aside the orders cancelling the registration of the assessee solely on the ground that there was delay in moving the revocation application, finding that the assessee has already deposited the entire tax and has filed the return thereafter.

The Petitioner filed the writ petition before the Hon’ble High Court challenging against the order dated 14.05.2019 cancelling the registration of the petitioner under the U.P.G.S.T. Act, 2017 and the order dated 25.03.2021 passed by the Appellate Authority upholding the order of cancellation of registration.

Facts of the Case: –

  • The Petitioner was an assessee under the U.P. Goods and Service Tax Act, 2017. That due to non-filing of returns, a show cause notice dated 29.04.2019 was issued to the petitioner, which was not attended by the petitioner.
  • As a result, the registration of the petitioner was cancelled by an order dated 14.05.2019 for the reasons as stated in the show cause notice.
  • It was further stated in the show cause notice that there was an outstanding Central Tax amounting to Rs.3,21,205/- and State Tax/UT Tax amounting to Rs.3,21,205/-, and the same was deposited by the petitioner on 30th January, 2021.
  • That on 03.02.2021, the petitioner preferred a revocation application as required under Rule 23 of U.P.G.S.T. rules, 2017. The said application was rejected by the Authority on the ground that he has not filed the return within time.
  • Later, an appeal was preferred against the said order before the Appellate Authority, which was also dismissed by an order dated 25.03.2021 by upholding the cancellation of registration order. Being aggrieved the petitioner has moved this writ petition.

Petitioner’s Submissions: –

  • It was submitted on the behalf of the petitioner that findings of the Appellate Authority are not correct as the entire payment to the tune of Rs.7,29,748/- was made by the petitioner on 30.01.2021 and thereafter, the return was also filed on the same date.
  • The Appellate authority has wrongly rejected the appeal on the ground that no return has been filed by the petitioner.
  • To support his stand, reliance was placed on the decisions of Suguna Cutpiece Center vs. The Appellate Deputy Commissioner (ST) (GST) and others and on the decision of Coordinate Bench of the Hon’ble Court in M/s Ansari Constructions vs. Additional Commissioner Central Goods and Services Tax (Appeals) and 2 others.

On the other hand, it was submitted on the behalf of the respondents that Rule 23 of the CGST/UPGST rules provides that revocation application against the cancellation or registration has to be filed within 30 days, however, in the present case, the registration was cancelled in the year 2019 and the revocation application has been filed in the year 2021. Therefore, the Assistant Commissioner and the Appellate Authority has rightly rejected the revocation application of the petitioner.

Held: –

  • The Hon’ble Court after considering the submissions, fact of the case, law applicable and the judgements referred, found that it is not in dispute that due to non-filing of the return, a show a cause notice was issued to the petitioner by the Taxing Authority on 29.04.2019, against which no reply was filed by the petitioner and the cancellation of registration came into effect from 14.05.2019 as mentioned in the said show cause notice.
  • Further it was noticed that when the petitioner came to know about the cancellation of registration, he deposited the entire tax on 30th January, 2021 and also filed the return before the concerned authority. However, the Assistant Commissioner on 17.02.2021 rejected the revocation application of the petitioner on the ground that the return was not filed within time and on the same ground the appeal of the petitioner was also dismissed by the Appellate Authority.
  • Thereafter, the Hon’ble Court on perusal of Rule 23 of the UPGST Rules, 2017, found that it has been specifically mentioned in the said rule that the revocation application has to be preferred within 30 days from the date of service of order of cancellation of registration. And in the present case, it has been categorically contended by the petitioner that he filed his return up to May, 2019, on 30th January, 2021 and had paid all the dues along with interest.
  • It was found by the Hon’ble Court that in the counter affidavit filed by the respondents, there is no mention of the date of the service of the order of cancellation of registration on the petitioner, as prescribed under Rule 23 of the rules. The purpose of inserting the provision under Rule 23 of Rules, 2017 as to service of notice upon the assessee is to provide an opportunity to him to move a revocation application so as to save the registration from being cancelled permanently and his business being hampered.
  • It was noted and observed by the Hon’ble Court that the Act and the Rules have been brought so as to see the business is run smoothly and is not hampered by the complexities of the provisions of the Act.
  • Thereafter, the Hon’ble Court referred to the decision of the Coordinate Bench in M/s Ansari Constructions (supra), wherein dealing with Section 29 of the GST, 2017 and Rule 23 of Rules, 2017, has held that once the Department has accepted the return and there remains no dues, the Department should not obstruct the business of an assessee’, and found that in the present case, it has not be disputed by the State that the petitioner has deposited the entire tax and also filed the return in the year Hence, the rejection of registration solely on the ground of delay in moving the revocation application, is not sustainable in law.
  • It was also noted by the Hon’ble Court that while passing the order, the Appellate Authority has not recorded any categorical finding as to the service of notice and merely on the ground that the application was time barred, proceeded to uphold the order of rejection of revocation application.

The Hon’ble Court with the above findings, allowed the writ petition and quashed the impugned orders dated 14.05.2019 and 25.03.2021 being unsustainable in the eye of law.

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