Facts of the Case

  • The Petitioner, M/s Manas Kumar Nayak, is a registered business entity carrying out commercial operations under the Goods and Services Tax framework.
  • A statutory registration certificate had been issued to the Petitioner under the provisions of the CGST Act, 2017.
  • The tax authorities initiated suo motu cancellation proceedings against the Petitioner's GST registration certificate.
  • The primary ground for the cancellation was the Petitioner’s failure to submit statutory GST returns for a continuous period of six consecutive months.
  • Aggrieved by the blocking of business operations resulting from the registration cancellation, the Petitioner filed a writ petition under Article 226 of the Constitution of India before the High Court of Orissa.

Issues Involved

  • Whether a taxpayer whose GST registration has been cancelled for non-compliance with return filings can be granted conditional relief via portal restoration to regularize tax defaults.
  • What legal mechanisms and timelines must be enforced to balance revenue protection with the taxpayer's right to carry on business by settling interest, late fees, and penalties.

Petitioner’s Arguments

  • The learned counsel for the petitioner acknowledged the operational lapse concerning the non-submission of the consecutive six months' GST returns.
  • It was strongly contended that the petitioner did not intend to evade tax liabilities but was restricted due to financial or operational bottlenecks.
  • The Petitioner formally expressed complete readiness and willingness to deposit the entirety of the outstanding taxes, accrued interest, statutory late fees, and applicable penalties.
  • To substantiate this commitment, the Petitioner filed an additional affidavit containing an explicit, legally binding undertaking to observe all requisite statutory formalities for the revocation of the cancellation.

Respondent’s Arguments

  • The Senior Standing Counsel appearing for the GST department highlighted the strict statutory requirements under Section 29 of the CGST Act, emphasizing that compliance via timely return submission is mandatory.
  • However, taking note of the Petitioner's affidavit-backed undertaking to clear all government dues, the Revenue adopted a pragmatic approach.
  • The Respondent agreed that upon the submission of a certified copy of the High Court's order, the department would grant the taxpayer access to the online GST portal to facilitate the seamless deposit of all outstanding liabilities.

Court Order / Findings

  • The Division Bench comprising Hon'ble Mr. Justice K.R. Mohapatra and Hon'ble Mr. Justice Mruganka Sekhar Sahoo disposed of the writ petition with a structured, time-bound directive:
    • Portal Activation: The Petitioner must produce a certified copy of the court order before the Superintendent, Puri-II Range, CBIC, Odisha (Opposite Party No.2). Upon production, the department is mandated to open the Petitioner's GST portal within seven days.
    • Payment Timeline: The Petitioner must deposit the entire outstanding tax, interest, late fees, and penalties within seven days from the exact date the portal is opened.
    • Revocation Timeline: Upon successful verification of the complete deposit within the stipulated timeframe, the tax authorities must officially revoke the cancellation of the GST registration within seven days.
  • Default Clause: The Court made it absolute that if the Petitioner fails to abide by the undertaking or miss the payment window, the order will lose its effect, and the cancellation will stand.

Important Clarification

  • This judgment clarifies that judicial intervention can provide relief against the harsh blocking of a GST portal, provided the taxpayer demonstrates bona fide intent by filing a formal affidavit-backed undertaking.
  • It underscores that the primary goal of the GST compliance mechanism is revenue realization and business continuity, rather than the permanent closure of default businesses.

Section Involved

  • Section 29(2)(c) of the Central Goods and Services Tax (CGST) Act, 2017: This provision empowers the proper officer to cancel a taxpayer's GST registration if a regular registered person fails to furnish statutory returns for a continuous period of six months.
  • Section 30 of the CGST Act, 2017: Read in conjunction for the revocation of cancellation of registration.

Link to download the order - https://mytaxexpert.co.in/uploads/1783068340_458compressed.pdf

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