Facts of the Case

The petitioner, M/s Aaria Infraserve Pvt. Ltd., was a company engaged in the business of real estate and renting and was registered under the Goods and Services Tax regime bearing GST Registration No. 36AAOCA6272F1ZH.

On the ground that the petitioner had not submitted GST returns for more than six months, Respondent No. 4 issued a show cause notice dated 23.04.2019. The petitioner submitted its reply to the said notice on 02.05.2019.

However, on the ground that the petitioner had continuously failed to file GST returns for more than six months, Respondent No. 4 cancelled the petitioner’s GST registration under Section 29(2) of the Central Goods and Services Tax Act, 2017, by order dated 14.12.2019.

Aggrieved by the cancellation order, the petitioner preferred an appeal before Respondent No. 3. By order-in-appeal dated 27.08.2022, the appellate authority dismissed the appeal on the ground of limitation and also on the ground that the order cancelling the GST registration had not been challenged.

The petitioner thereafter approached the Telangana High Court under Article 226 of the Constitution of India, seeking quashing of the appellate order dated 27.08.2022 and the GST registration cancellation order dated 14.12.2019.

Issues Involved

The principal issues before the High Court were:

  1. Whether the cancellation of the petitioner’s GST registration under Section 29(2) of the CGST Act, 2017 for continuous non-filing of GST returns should be sustained in the facts and circumstances of the case.
  2. Whether rejection of the petitioner’s appeal on the ground of limitation under Section 107 of the CGST Act, 2017 should result in the petitioner being left without an effective remedy.
  3. Whether the matter required reconsideration by the competent GST authority, particularly in light of the legal position considered in M/s Chenna Krishnama Charyulu Karampudi vs Additional Commissioner (Appeals-I), W.P. No. 27071 of 2022, decided on 27.06.2022.
  4. Whether the cancellation and appellate orders should be set aside and the matter remanded for fresh consideration in accordance with law.

Petitioner’s Arguments

The petitioner challenged the appellate order dated 27.08.2022, which had rejected its appeal and confirmed the cancellation of GST registration.

The petitioner’s grievance was that despite having submitted a reply dated 02.05.2019 to the show cause notice dated 23.04.2019, its GST registration was subsequently cancelled by order dated 14.12.2019 on the ground of continuous non-filing of GST returns for more than six months.

The petitioner sought interference under Article 226 of the Constitution of India against the cancellation of its GST registration and the subsequent rejection of its appeal.

The petitioner’s challenge effectively required reconsideration of the grievance against cancellation of registration rather than leaving the petitioner without an effective remedy merely because the statutory appeal had been dismissed on limitation.

Respondents’ Arguments

The respondents defended the cancellation and appellate proceedings arising from the petitioner’s failure to file GST returns continuously for more than six months.

The cancellation of registration had been made under Section 29(2) of the CGST Act, 2017, and the appeal had been dismissed on the point of limitation as well as on the ground that the cancellation order had not been challenged.

Significantly, however, the learned counsel appearing for the parties were in agreement before the High Court that the issue raised in the writ petition was squarely covered by the Telangana High Court’s earlier decision in M/s Chenna Krishnama Charyulu Karampudi vs Additional Commissioner (Appeals-I).

Court’s Findings

The Telangana High Court recorded that the issue raised in the writ petition was squarely covered by its earlier decision in:

M/s Chenna Krishnama Charyulu Karampudi vs Additional Commissioner (Appeals-I), W.P. No. 27071 of 2022, decided on 27.06.2022.

In the said precedent, the Court had examined the statutory appellate framework under Section 107 of the CGST Act, 2017. It noted that:

  • Under Section 107(1), the limitation period for filing an appeal is three months from the date of communication of the order appealed against.
  • Under Section 107(4), the appellate authority may permit presentation of the appeal within a further period of one month where sufficient cause is shown.
  • The appellate authority may therefore be correct in holding that it cannot extend limitation beyond the additional statutory period of one month.
  • However, such a position could adversely affect a taxpayer whose GST registration had been cancelled, particularly where the GST Tribunal remedy was unavailable at the relevant time.

The earlier decision also recognised that where the dispute concerns cancellation of GST registration, the facts and circumstances may justify remanding the matter to the competent authority for reconsideration in accordance with law.

Applying that reasoning, the High Court held that the petitioner’s matter should also be remanded for fresh consideration.

Court Order / Final Decision

The Telangana High Court passed the following operative directions:

  • The order dated 14.12.2019 passed by Respondent No. 4 cancelling the petitioner’s GST registration was set aside and quashed.
  • The appellate order dated 27.08.2022 passed by Respondent No. 3 was also set aside and quashed.
  • The matter was remanded back to Respondent No. 4.
  • Respondent No. 4 was directed to consider the grievance expressed by the petitioner against cancellation of GST registration.
  • Thereafter, the authority was required to pass an appropriate order in accordance with law.
  • At the time of hearing on remand, the petitioner was required to submit all returns as per the statute.
  • The writ petition was disposed of.
  • Pending miscellaneous applications, if any, were closed.
  • There was no order as to costs.

Important Clarification by the High Court

The High Court expressly clarified that it had not expressed any opinion on the merits of the case.

Accordingly:

  • All contentions of the parties were kept open.
  • The setting aside of the cancellation and appellate orders did not amount to a final adjudication that the petitioner was substantively entitled to restoration of GST registration.
  • The competent authority was required to reconsider the petitioner’s grievance independently and pass an appropriate order in accordance with law.
  • The petitioner was specifically required to submit all statutory returns when the matter was heard on remand.

This clarification is important because the High Court granted procedural relief and restored the matter for reconsideration without deciding the substantive merits of the registration dispute.

Sections and Legal Provisions Involved

  • Section 29(2) of the CGST Act, 2017 – Cancellation of GST registration by the proper officer in specified circumstances, including applicable defaults concerning return filing.
  • Section 107(1) of the CGST Act, 2017 – Statutory appeal before the appellate authority and the prescribed three-month limitation period.
  • Section 107(4) of the CGST Act, 2017 – Power of the appellate authority to permit filing of an appeal within a further period of one month upon sufficient cause being shown.
  • Section 109 of the CGST Act, 2017 – Provisions relating to constitution of the Goods and Services Tax Appellate Tribunal, as discussed in the precedent relied upon by the Court.
  • Section 112 of the CGST Act, 2017 – Appeal to the Appellate Tribunal, referred to in the related precedent reproduced and relied upon in the judgment.
  • Article 226 of the Constitution of India – Constitutional writ jurisdiction of the High Court.
  • Articles 14, 19 and 21 of the Constitution of India – Invoked in the writ petition while challenging the impugned action.
  • Section 151 of the Code of Civil Procedure, 1908 – Referred to in the interlocutory application seeking interim suspension of the impugned orders.

Link to download the order -https://mytaxexpert.co.in/uploads/1783500863_1521compressed.pdf

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