HC justifies delay as the cancellation of GST registration has an impact on livelihood
Facts and Issue of the case
The question raised by learned Senior Counsel for the petitioner, in the present writ petition is emanating from the impugned orders, which have been passed by the Competent Authorities under the Uttarakhand Goods and Service Tax, Act of 2017, whereby by an order, which has been passed by the Assistant Commissioner, GST, he had cancelled the registration of the petitioner, which was bearing GST Registration No.GSTIN 05AGMPK8182B3ZC”, which was alleged to have been registered, in his name as back as on 03.07.2017. The reason, which has been assigned in the order of cancellation of the registration, was that since the petitioner was an assessed tax payer, and as he has failed to file his continuous returns for a period of over six months which was otherwise mandatory under the Act, and hence his registration was cancelled. The petitioner has contended, that the aforesaid cancellation of the registration of the petitioner vide the order of Assistant Commissioner, on 21.09.2019, was without providing any opportunity of hearing to the petitioner, and hence it would be bad in the eyes of law.
Be that as it may, factually the learned Senior Counsel for the petitioner has submitted, that the petitioner is a proprietorship firm, which is presently engaged in performing the work of painting and conducting repairing work, and since being a service provider, under the Uttarakhand Goods and Service Tax, Act, which was required to be registered and which admittedly itself had got registered on 03.07.2017. The petitioner submits that on account of the financial loss it had suffered a financial crisis, in the year 2019- 2020, and hence he was not able to pay the tax returns for the period, which had constituted, as to be the basis and the reasoning for cancellation of his registration by the impugned order dated 21.09.2019. He further submits, that though the Assistant Commissioner on 09.09.2019, had issued the show-cause notice prior to taking an action of cancellation of registration of the petitioner.
Observation by the court
At this stage, this Court feels it to be necessary to point out, that the shelter, which has been taken by the petitioner for the purpose of enlarging the period of limitation it was based on the pretext of the judgment of the Hon’ble Apex Court which was rendered in Writ Petition, where the relaxation from the period of limitation has been provided for the period from 15.03.2020 to 14.03.2021, one of the issues for consideration would be as to whether at all the said relaxation could be made applicable under the facts and circumstances, of the instant case, where the petitioner, was already noticed much prior in time, though the exception, which has been carved out by the counsel in the argument and the pleadings, is by shouldering and shifting the responsibility on the Advocate, who was appointed on behalf of the petitioner to file his returns, and reply to the notice issued, which was not done so by the petitioner or his counsel thus engaged, within the prescribed period, and further on account of the glitch in the GST Portal, his registration was cancelled.
In fact, at this stage itself, this Court feels to be necessary to point out that this order of cancellation of registration and the limitation provided, therein, under the Act, for preferring of an appeal had expired, even much prior to the judgment of the Hon’ble Apex Court, by virtue of which the extension of limitation was provided in general. Learned Senior Counsel, for the petitioner has contended, that the cancellation order itself was not communicated to the petitioner by his Advocate, and thus in view of the lack of information being imparted to him, the petitioner firm remained ignorant of the order of the cancellation. It is an admitted case of the petitioner, that the knowledge of the cancelling the GST registration, was parted to him after the lapse of about 477 days, when the court had approached the counsel to know about the status of the registration, and hence the submits that the cancellation order, which was made, while exercising the powers under Section 29(2) (C) of the GST Act.
The provisions of Section 29 (2) (c), which empowers the Competent Authority, (registering authority), to cancel the registration is a self contained provision, where the power of cancellation, could be exercised by the Assessing Authority for cancellation of the registration, subject to satisfying the condition of non fulfillment of the conditions, which otherwise an assessee was required to adhere to, for the purposes of submissions of the returns for the period, as it has been detailed therein under Section 29 (2) (c) of the Act. Its not only that, this Court cannot be oblivions of the fact, that even prior to providing the recourse of an appeal under Section 107 of the Act, the legislature under the Act, had itself provided an inbuilt mechanism, which was available to the Assessee, while the petitioner could have invoked Section 30 (1) of the Act, for the purposes of revocation of an order of cancellation of the registration, provided it satisfies the condition provided under Section 30 of the Act. Though, it may not be relevant, to make a reference to Section 30 of the Act, at this stage, for the reason being, that it is an admitted case of the petitioner, that no such application for revocation of the cancellation of the registration, was ever filed by the petitioner within the time provided under law, the reason being, on the pretext, that the knowledge of the order of cancellation was not given to him, so there was no occasion for the petitioner to have filed an application for revocation. Ultimately, the petitioner preferred an appeal as provided under Section 107 of the Act.
On the scrutiny of sub-section (1) of Section 107 of the Act, the specific period of limitation, as prescribed therein, for the purposes of preferring of an appeal, against the order of cancellation of the registration, is that of three months, from the date of the decision itself or order is communicated to such petitioner. Under sub- section (4) of Section 107 of the Act (as extracted above), the period of limitation as prescribed, therein, of preferring of an appeal under Section 107 of the Act, could be extended, for a further period of thirty days by the Appellate Authority itself, but since in the present case the appeal was preferred even much beyond the period of limitation even provided under Section 107 (4) of the Act, which has expired on 19.01.2020. The reference of this date of 19.01.2020, becomes relevant, because this expiry of period of limitation, was even much prior to the issuance of the notification issued by the Government of India, imposing the restrictions of lockdown due to Covid 19 pandemic, and hence the shelter being taken in pursuance to the orders of the Hon’ble Apex Court, since was made applicable even after the expiry of the period of limitation provided under Section 107(4) of the Act, the principles from the Hon’ble Apex Court judgment would not be attracted in the instant case.
Admittedly, in the instant case the petitioner has preferred an appeal as against the impugned order, the petitioner submitted, that all the pending returns, along with the tax, interest and late fee, till the date of the cancellation of registration stood paid, but since the remittance of any of the dues, as detailed above could only be established before the assessing authority or even before an appellate jurisdiction, also only by way of the documents on record, and not by way of the personal knowledge, the manner in which the paragraph No.16, of the writ petition has been pleaded by the petitioner, no reliance could be placed on the said, at this stage of the writ petition.
The petitioner further submitsof the writ petition, that he undertakes to pay the penalty, after the restrictions of the GST Registration is lifted. This contention raised in the writ petition of undertaking for meeting the liability, to pay the tax returns, which he has defaulted, to be remitted in the light of the provisions contained under Section 29 (2) (c) of the Act, runs contradictory to his own pleadings which had been raised in the writ petition, where the petitioner has submitted, that the appeal which was, thus, preferred by him under Section 107 of the Act, was barred by 52 days only, and it ought not to have been rejected, under the pretext of the extended period of limitation which had been provided by the Hon’ble Apex Court. However, the petitioner’s appeal was rejected on the ground of limitation by one of the impugned order, whereby after its rejection the “Form GST APL-01”, was issued.
The petitioner’s has tried to submit, that the aforesaid extension of limitation, as it was provided by the Hon’ble Apex Court, has been made applicable before the Taxing Appellate Forums too, in view of the circular which was later issued, by the Central Board of Direct Taxes and Customs, in fact this circular too, would not be of any benefit to the petitioner, for the reason being, that the adoption of the principle for the extension of the limitation period based on the Hon’ble Apex Court judgment, which was adopted by the Board, it was only much after preference of an appeal by the petitioner.
Thus, the knowledge, which the petitioner attributes, that he could not obtain the knowledge, for a period of 477 days, in fact smacks a sense of irresponsibility for an assessee, who is facing an order of cancellation of its registration and particularly when the assessee was, attributing its responsibility on the Advocate, without there being any pleading to the said effect, that in case he was misguided or mislead by the Counsel; as to what action he has taken against the Counsel, who had misinformed him or had not informed him about the order of the cancellation of his registration. Hence, the plea of inability to prefer an appeal within the specified period of limitation being on account of the Covid – 19 pandemic, is not sustainable, and is not accepted by this Court, as period of preferring an appeal, expired much prior to declaration of Lockdown by the Government of India. In order to challenge the two orders, the petitioner’s Senior Counsel, has submitted that even if the appeal has been dismissed on the ground of limitation, because of the provisions under sub-section (4) of Section 107 of the Act, the period of limitation could not have been extended beyond the period of one month; still the principal order of cancellation of GST Registration could still be scrutinized by the High Courts’, while exercising its power under Article 226 of the Constitution of India.
The learned Senior Counsel for the petitioner had submitted, that despite of the appeal having been dismissed on the ground of limitation, still the High Court can venture into the principal order of cancellation of the GST registration of the petitioner, it is contended that its a principle which has been laid down by the full bench of the Hon’ble Gujarat High Court, and the said principles can also be attracted, to be made applicable by the writ courts, in the present case, in scrutinizing the principal order of cancellation of the registration.
This Court is not in agreement with the arguments as it has been extended by the learned Senior Counsel for the petitioner; for the reason being that if the principal ratio which had been laid down by the full bench judgment of the Hon’ble Gujarat High Court, is taken into consideration, it has rather laid down a specific classification and distinction too, and had provided for the circumstances under, which the High Courts can scrutinize the principal order of cancellation of the registration, which can be widely enumerated on scrutinizing the judgment of the full bench. On the basis of these seven major guiding factors, which has been provided by the judgment of the Hon’ble Gujarat High Court, for the purposes of principle of attracting Article 226 of the Constitution of India, for the purposes to scrutinize the order which has been passed under Section 29 (2) (c) of the Uttarakhand VAT Act.
Hence in that eventuality, the impugned orders, which are under challenge, cannot be said to be brought within the ambit of any of the exceptions culled out by the Full Bench judgment of the Hon’ble Gujarat High Court, in order to enable the writ courts to exercise its inherent jurisdiction under Article 226 of the Constitution of India, to scrutinize the principal order of cancellation of registration . Hence, since the appeal itself has been dismissed on the ground of limitation, the writ remedy would not be available to the petitioner.Vinod-Kumar-Vs-Commissioner-Uttarakhand-State-GST-Commissionerate-Uttarakhand-High-Court-1
The writ petition lacks merits and the same is accordingly dismissed.