Facts of the Case

The petitioner, M/s Bheema Construction, challenged the order dated 29.03.2022 cancelling its GST registration and sought a direction to the authorities to revoke the cancellation of its GST registration.

The petitioner contended that it could not file an appeal within the prescribed limitation period due to bona fide reasons, unavoidable circumstances, and the impact of the COVID-19 pandemic. It was further submitted that the petitioner had discharged the tax liability up to the date of cancellation and had also paid taxes for the subsequent period, besides depositing certain amounts with the GST authorities. The petitioner sought restoration of its registration to continue its business activities.

Issues Involved

  1. Whether cancellation of GST registration could be reconsidered despite the expiry of the statutory period for seeking revocation.
  2. Whether the availability of the remedy under Section 30 of the CGST Act bars the remedy of appeal under Section 107.
  3. Whether delay caused due to the COVID-19 pandemic constituted sufficient cause for not seeking revocation of cancellation within the prescribed period.
  4. Whether the GST authorities were justified in refusing to reconsider the petitioner's request for revocation of cancellation of registration.

Petitioner's Arguments

  • The petitioner submitted that the GST registration was cancelled by the impugned order dated 29.03.2022.
  • It was argued that the appeal could not be filed within the prescribed limitation period due to bona fide reasons and unavoidable circumstances arising during the COVID-19 pandemic.
  • The petitioner asserted that all tax dues up to the date of cancellation had been paid and taxes for the subsequent period had also been discharged.
  • Reliance was placed upon several judicial precedents including:
    • Deepak Vasude Asrani Chugh HUF vs Joint Commissioner of GST Appeals-II;
    • Aarcity Builders Pvt. Ltd. & Others vs Union of India & Others;
    • Uchit N Sheth vs Respondent; and
    • M/s Neo Built vs ETO-cum-Proper Officer & Another,
      to contend that liberal consideration should be given in matters relating to revocation of GST registration cancellation.

Respondents' Arguments

  • The respondents contended that the writ petition lacked merit and deserved dismissal.
  • It was argued that the petitioner had an alternative statutory remedy under the provisions of the CGST Act.
  • The respondents opposed interference with the cancellation order.

Court Order / Findings

The Karnataka High Court held that Section 107 of the CGST Act, 2017 provides an independent statutory remedy of appeal against an order cancelling GST registration.

The Court observed that the availability of the remedy under Section 30 for seeking revocation of cancellation does not extinguish or exclude the independent appellate remedy under Section 107.

The Court further accepted the petitioner's explanation that the delay in seeking revocation was attributable to the COVID-19 pandemic and held that the explanation constituted sufficient cause for reconsideration of the petitioner's request.

Accordingly, the High Court:

  • set aside the impugned cancellation order dated 29.03.2022;
  • directed the competent authority to reconsider the petitioner's request for revocation of cancellation of GST registration;
  • directed that such reconsideration be undertaken keeping in view the judicial precedents relied upon by the petitioner; and
  • directed the authority to pass an appropriate order within two weeks, subject to payment of outstanding tax dues in accordance with law.

Important Clarification

  • The remedy under Section 30 for revocation of cancellation and the appellate remedy under Section 107 are independent statutory remedies.
  • Delay attributable to the COVID-19 pandemic may constitute sufficient cause for seeking reconsideration of cancellation of GST registration.
  • GST registration cancellation should be reconsidered where the taxpayer has cleared outstanding tax liabilities and demonstrates bona fide reasons.
  • The judgment follows the liberal judicial approach adopted in several High Courts towards restoration of GST registration to enable continuation of genuine business activities.
  • The competent authority must reconsider such applications by passing a reasoned order in accordance with law.

Sections Involved

  • Section 30 of the Central Goods and Services Tax Act, 2017 – Revocation of Cancellation of Registration.
  • Section 107 of the Central Goods and Services Tax Act, 2017 – Appeals to Appellate Authority.
  • Articles 226 & 227 of the Constitution of India – Writ Jurisdiction of High Courts.

Link to download the order - https://mytaxexpert.co.in/uploads/1782895217_217compressed.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.