Facts of the Case

The petitioner, M/S R.N. Enterprises, Lucknow, through its proprietor Mr. Rudra Prakash Singh, challenged before the Allahabad High Court the order dated 30.11.2019 cancelling its registration under the GST law, and the subsequent order dated 17.02.2022 by which its appeal against the cancellation was rejected. A show cause notice dated 13.11.2019 had been issued calling upon the petitioner to explain why its registration should not be cancelled for non-filing of returns; the petitioner replied on 22.11.2019, but the cancellation order recorded that no reply had been furnished. The Standing Counsel later clarified that the actual default period was March 2019 to September 2019 (over six months), and that the reply, though on record, was not considered as it was filed a day beyond the seven-day window prescribed in the show cause notice.

Issues Involved

  1. Whether the show cause notice and the cancellation order were vitiated by inconsistencies in the stated period of default and by non-consideration of the petitioner's reply.
  2. Whether the cancellation of GST registration could be revoked upon the petitioner clearing outstanding dues, interest and penalty.

Petitioner's Arguments

  • The appellate order dated 17.02.2022 records non-filing of returns for six months but lists the months as November 2018 to March 2019, which is only five months, an inconsistency said to vitiate the show cause notice, the cancellation order and the appellate order.
  • The cancellation order dated 30.11.2019 wrongly states that no reply to the show cause notice was given, even though the order itself refers to the petitioner's reply dated 22.11.2019, reflecting non-application of mind.
  • Non-filing of returns had occurred on account of the medical condition of the proprietor's mother.

Respondent's Arguments

  • The show cause notice was issued because returns were not filed for more than six months, from March 2019 to September 2019.
  • The petitioner was required to reply within seven days of the notice, i.e., by 21.11.2019; the reply filed on 22.11.2019 was therefore beyond time and could not be acted upon, though it was referred to in the order.
  • On instructions, the Standing Counsel offered that if the petitioner deposited the entire dues along with interest and penalty within a specified time, the case for revocation of the cancellation could be considered.

Court Order/Findings

  • The petitioner's counsel accepted the respondent's proposition for conditional revocation.
  • The Court directed that if the entire dues, along with interest and penalty, are deposited within seven days, the respondents shall consider revocation of the cancellation of the petitioner's GST registration within the next two weeks of such deposit.
  • The writ petition was disposed of in these terms, without an adjudication on the merits of the arguments concerning inconsistency in the stated default period or non-consideration of the reply.

Important Clarification

  • A challenge to cancellation of GST registration for non-filing of returns can be resolved by consent, with the department agreeing to consider revocation conditional on payment of outstanding dues, interest and penalty, without the Court ruling on the underlying grounds of challenge.
  • Discrepancies in the period of default stated across the show cause notice, the cancellation order and the appellate order, and non-consideration of a reply filed even a day beyond the prescribed period, are matters that can found a substantive challenge, though here they were left undecided because the parties reached a consent-based resolution.

Sections Involved

  • The order does not cite specific section numbers of the Central Goods and Services Tax Act, 2017; the dispute concerns cancellation of registration for non-filing of returns and its revocation, ordinarily governed by the provisions on registration and its cancellation/revocation under the CGST Act, 2017 and the corresponding State GST Act.

Decision – In Favour of

Disposed of with directions, in the Petitioner's favour on a conditional basis. The Court did not decide the merits of the challenge to the show cause notice or the cancellation order, but recorded the department's undertaking to consider revocation of the cancellation if the petitioner deposits the entire dues, interest and penalty within seven days, with the decision to follow within two weeks thereafter.

Related Case Laws

No related case laws are available on this site at present.

Case Details

  • Court: Allahabad High Court
  • Case No.: Writ Tax No.67 of 2022
  • Coram: Hon'ble Justice Abdul Moin
  • Date of Order: 08.04.2022

Link to Download the Order

Download the full judgment (PDF)

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