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August 5, 2020

Is restoration of suo moto Cancellation of Registration possible under GST?

by Rubina Dsouza in GST, Legal Court Judgement

Is restoration of suo moto Cancellation of Registration possible under GST?


Registration of an entity is the initial basic step one has to follow to carry on supply or any other GST compliances. While one may find the registration process unnecessary and complicated, it is followed by a number of advantages, such as legal recognition as supplier of goods/services, availment of ITC, legal authorisation to collect tax from customers etc.

The GST law provides for two scenarios where cancellation of registration can take place:-

1.Taxable person no more requires the registration and wants to voluntarily cancel it

2. When the proper officer considers the registration liable for cancellation in view of certain specified defaults: –

i. registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed

ii. a person paying tax under composition scheme has not furnished returns for 3 consecutive tax periods

iii. a person, (other than a person under composition levy), has not furnished returns for a continuous 6 months

iv. any person who has taken voluntary registration under of section 25(3) has not commenced business within 6 months from the date of registration

v. registration has been obtained by means of fraud, wilful misstatement or suppression of facts

When the registration has been cancelled by the Proper Officer on his own motion and not on the basis of an application by the registered person, then the registered person, whose registration has been cancelled, can submit an application for revocation of cancellation of registration. Application for revocation is to be filed to the Proper Officer, within a period of 30 days from the date of order of cancellation of registration.

Can application of revocation of registration be filed when application of cancellation of registration was sent in by mistake?

A similar situation arose in the case of M/s Mahadev Traders vs. Union of India where writ petition was filed seeking a direction to the respondents to restore the registration certificate of the petitioner in accordance with the order dated 15th June, 2020 passed by the Appellate Authority as well as to permit the petitioner to file all its pending returns without any interest or late fees.

Facts of the Case

  1. The Tax Consultant of the petitioner inadvertently applied on 6th November, 2018 for cancellation of registration of the petitioner instead of another firm M/s Mahakal Traders of which the petitioner’s wife is the proprietor.
  2. As the petitioner was not able to withdraw the application for cancellation of registration certificate on the common portal, it wrote a letter dated 19th February, 2019 to the Proper Officer for withdrawal of application for cancellation of registration.
  3. However, after a lapse of more than a year, the petitioner’s registration certificate was cancelled during lock-down vide ex parte order dated 8th April, 2020 with retrospective effect from 6th November, 2018.

Appeal to the Appellate Authority

Upon an appeal being filed by the petitioner, the Appellate Authority vide order dated 15th June, 2020 set aside the cancellation of petitioner’s registration and allowed its restoration.

Cancelled Registration not restored by Proper Officer

However, on 1st July, 2020 petitioner received a letter from the Proper Officer stating that it is not possible to revoke or restore the petitioner’s registration as the common portal does not permit the Proper Officer to do so.

Submission by Petitioner

  1. Counsel for the petitioner stated that till date the petitioner had been filing its returns and paying its taxes.
  2. If the registration certificate of the petitioner is cancelled w.e.f. 06th November, 2018, all the buyers who have made purchases from the petitioner would be denied the use of input tax credit leading to a lot of chaos and confusion.

Appeal to High Court

  1. Aggrieved with the stand of the GSTIN and Proper Officer, the taxpayer appealed before the High Court
  2. Respondent stated that respondent did not wish to challenge the order of the Appellate Authority in petitioner’ favour.
  3. He admitted that the petitioner had an authentic case.
  4. GSTIN stated that the functionality of restoration is at the stage of ‘User Acceptance/Testing’ and will be incorporated on the common portal within fifteen days.
  5. Consequently, after fifteen days, respondents would be in a position to restore the petitioner’s registration.

Hence a new functionality for restoration of cancelled registration certificate will soon be added to the common portal in effect of the order passed by the Delhi High Court.

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