Assessee’s Commitment to File Default Period Returns: A Ground for Reinstating Cancelled GST Registration
By: Admin | December 26, 2024
Categories: Important Pronouncements | 4 Min Read
The Hon’ble Calcutta High Court, in Pranabesh Sarkar v. Superintendent, CGST & CX [WPA No. 14557 of 2024, dated August 5, 2024], ruled that an Assessee’s willingness to file overdue GST returns and pay applicable dues provides valid grounds to reverse GST registration cancellation due to non-compliance.
Key Facts
1. Show Cause Notice and Cancellation
Pranabesh Sarkar (“the Petitioner”) received a Show Cause Notice (SCN) on July 8, 2022, for failing to file GST returns for six consecutive months. Consequently, the Revenue Department canceled the GST registration through an order dated August 24, 2022 (“Impugned Order”).
2. Petition for Reinstatement
The Petitioner challenged the cancellation by filing a writ petition. He committed to filing the overdue returns and paying all applicable dues, including tax, interest, fines, and penalties. He cited the judgment in Shubhankar Golder v. Assistant Commissioner of State Tax, Serampore Charge [MAT 639 of 2024, dated April 9, 2024], where similar relief was granted.
Key Issue
Does an Assessee’s commitment to file returns and clear dues justify reversing an order canceling GST registration due to non-compliance?
Court’s Observations
1. Non-Filing of Returns
The Court observed that the cancellation resulted solely from the Assessee’s failure to file returns. This action disrupts business operations and reduces tax revenue collection.
2. Revenue Recovery Challenges
The Court noted that maintaining the cancellation would hinder the Assessee’s ability to conduct business or issue invoices, complicating tax recovery further.
3. Relief Conditions
The Court reversed the cancellation order. However, the relief was conditional on the Assessee filing all default period returns and clearing outstanding liabilities, including interest, fines, and penalties.
Relevant Provision
Section 29(2) of the CGST Act, 2017
The section allows cancellation of GST registration if:
- Returns are not filed for a specified continuous period.
- The proper officer, after a hearing, deems it appropriate.
Conclusion
The Hon’ble Calcutta High Court underscored the importance of compliance over punitive measures. The ruling highlights the need to give Assessees an opportunity to rectify defaults, aligning with principles of natural justice and efficient tax recovery.
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