Blog No. 52: Re-storing the registration in case where all statutory remedies are exhausted, subject to conditions

The registered person is an agent of Government through whom taxes are collected. Therefore, the intention of Act has never been to take them out of the purview of Act. For this purpose, the provisions of filing an application for revocation of cancellation of registration, filing appeal against rejection orders have been made. From time to time, these provisions were relaxed by way of allowing a facility to file an application for revocation [Refer Order No. 01 of 2020; Not. No. 34/2021-CT]. 

However, in one of the cases, many petitioner(s) were not covered by the relaxations mentioned above and they came out of all statutory remedies i.e., their time limit to file application for revocation or appeal against order for cancellation of registration had expired. 

Hon’ble Madras High Court directed the department to re-store their registrations. However, the court imposed strict conditions while allowing this benefit so that this does not become a habit. Read about the case [Suguna Cutpiece Centre vs Appellate Deputy Commissioner (ST) (GST)(2022)] below:

Facts of the Case

1. In this case, the writ petition has been filed by various assessee’s aggrieved by the cancellation of registration under the Act. For the sake of easy reference, all writ petitioners can be categorised into following categories:

1.1.        Where appeal was preferred against order cancelling the registration beyond statutory period of limitation. Benefits of concessions granted vide Order No. 01/2020 dated 25.06.2020, Not. No. 34/2021 dated 29.08.2021 was not availed.

1.2.        Where appeal was preferred against order cancelling the registration beyond statutory period of limitation. Benefit of concessions granted Not. No. 34/2021 dated 29.08.2021 was availed amidst pendency of writ petition.

1.3.        Where order for cancellation of registration was passed and all returns for the period upto date of cancellation were filed by the petitioner.

1.4.        Where order for cancellation of registration was passed, application for revocation of cancellation was filed after filing all returns and making payment of taxes.

1.5.        Where order for cancellation of registration was passed, application for revocation of cancellation was filed after filing all returns and making payment of taxes. Appeal was preferred against rejection order beyond statutory period of limitation

Submissions of the Petitioner as well as
Respondent

2. In the submissions made by each category of petitioner – chronologically are as under:

2.1.        Petitioner:

1. In some petitions: Returns in Form GSTR-3B for the period upto cancellation of order were filed.
2. In some petitions: Portal did not permit petitioner to file application for revocation of cancellation of registration. Therefore, the appeal was filed as a last resort. GSTR-3B returns are filed for the period upto cancellation of registration.
3. In some petitions: Ground for cancellation of registration is not mentioned in the law.
4. In some petitions: Benefit of Supreme Court order for extension in time is available.

Respondent:.

1. In some petitions: Appeal was filed beyond statutory period of limitation. Earlier also this court had dismissed the writ petitions on similar facts. Though the Review Petition is pending but the law as held in earlier order still stands as on date. Also, the petitioner did not file application for revocation of cancellation of registration.
2. In some petitions: The benefit of Order No. 01/2020 was available on cancellation orders issued upto 12.06.2020, and only if the petitioner files return as well as pay taxes. The benefit of Not. No. 34/2021 was available where time period to file application for revocation fell during the period 01.03.2020 to 31.03.2021. The petitioner did not avail benefit of Order No. 01/2020 and did not get covered by Not. No. 34/2021.
3. In some petitions: The benefit of COVID extension ordered by Supreme Court is not available as the cancellation orders were passed much before the time to which said order apply.

2.2.         –

2.3.        Petitioner: Undertake to file all returns for the period subsequent to the date of cancellation of registration along with late fee within a period of 4 weeks or period as prescribed by Court.

Respondent: Neither appeal nor application for revocation of cancellation of registration has been filed.

2.4.        Petitioner: Registration as well as application for revocation is cancelled only on ground that assessing officer formed a view regarding ineligibility of ITC which is not at all a ground for proceeding under this section.

2.5.        Petitioner: Appeal is liable to be taken up in terms of extension granted by Hon’ble Supreme Court in Suo Motu WP (Civil) No. 03 of 2020 (in some cases).

Observations of the Court

3. The law on the limitation has been well settled by the Hon’ble Supreme Court. Statutory appeal that is filed beyond the statutory period for condonation of delay under Section 35 of the Central Excise Act, 1944 cannot be condoned [(2008) 3 SCC 70]. Therefore, appeals were rightly rejected.
4. All these petitioners whose registration had been cancelled prior to 12.06.2020 were given a fresh opportunity to file an application for revocation of cancellation of registration by considering relevant date as 31.08.2020. However, none of the petitioners opted to exercise the
   privilege.
5. Later on, provisos were added to section 30(1) which were made effective from 01.01.2021. However, none of the petitioners were eligible to take benefit from the same. 
6. Still later, in view of the prevailing situation, Notification No.34/2021 – Central Tax was issued. However, this was applicable to those registration which had been cancelled and time limit for filing application for revocation of cancellation of registration had expired during the period commencing from the 1st day of March, 2020 to 31st day of August, 2021. Thus, the time limit for making such application stood extended upto the 30th day of September, 2021.
7. The cases of the petitioners are now beyond the clarifications and relaxation referred to supra. The purpose of GST registration is only to ensure just tax gets collected on supplies of goods or service or
8. both and is paid to the exchequer. Keeping these petitioners outside the bounds of the GST regime is a self-defeating move as no tax will get paid on the supplies of these petitioners.
9. Power of this Court under Article 226 of the Constitution of India is being exercised cautiously in favour of the petitioners as this power is conceived to serve the ends of law and not to transgress them. Therefore, impugned orders are quashed.
10. The authorities acting under the Act may impose penalty with the gravity of lapses committed by these petitioners by issuing notice. If required, the Central Government and the State Government may also uitably amend the Rules to levy penalty so that it acts as a deterrent on others from adopting casual approach.

Paksh Remarks

11. It is advisable that the assessee’s must act within due time provided in the statute.
12. The delays in making compliances would become cost to the assessee’s themselves.
13. In the above case, the registrations have not been ordered to be re-stored unconditionally. The conditions imposed are very strict which has made the compliance more stricter.
14. The Court directed to make payment of taxes, and directed that such payment of taxes cannot be made from the unutilised or unclaimed input tax credit. Utilisation of unutilised or unclaimed input tax credit has been made subject to scrutiny and approval by the jurisdictional officer.