Facts of the Case

The petitioner, M/s Solanki Enterprises, challenged:

  • The order dated 27.01.2021 cancelling its GST registration
  • The show cause notice dated 13.01.2020 which led to cancellation
  • The appellate order dated 23.11.2022 rejecting the appeal against cancellation

The petitioner also filed a revocation application, which was under consideration pursuant to directions issued by the Court.

The Court directed the authorities to verify whether the petitioner’s Electronic Credit Ledger had sufficient balance to discharge tax liability for the relevant period.

Issues Involved

  1. Whether GST registration cancellation could be sustained despite pending revocation consideration.
  2. Whether shortfall in Electronic Credit Ledger justified denial of revocation.
  3. Whether the petitioner should be granted an opportunity to regularize compliance by payment of dues and interest.

Petitioner’s Arguments

  • The cancellation order and appellate rejection were arbitrary and unsustainable.
  • The petitioner sought revocation of cancellation and restoration of GST registration.
  • It was submitted that any deficiency in tax liability or ledger balance could be rectified.
  • The petitioner agreed to deposit the required amount along with interest within a stipulated time.

Respondent’s Arguments

  • As per instructions from the department:
    • There was a shortfall of ₹9,520/- in the Electronic Credit Ledger for 194 days.
    • The petitioner was liable to pay interest of ₹911/- before revocation could be considered.
  • Revocation could only be granted after clearing outstanding liability and interest.

Court’s Findings / Order

  • The Court noted that the deficiency was minor and quantifiable.
  • It accepted the petitioner’s undertaking to deposit the required amount within two days.

Directions Issued:

  1. Upon payment of:
    • Shortfall amount, and
    • Applicable interest,

the respondents shall:

    • Process the revocation application, and
    • Restore GST registration in accordance with law.
  1. The petitioner must:
    • Comply with all statutory requirements after restoration.
  2. The petition was disposed of in these terms.

Important Clarification

  • GST registration cancellation is not irreversible where:
    • Tax liability is ascertainable, and
    • The taxpayer is willing to comply.
  • Courts may allow restoration subject to payment of dues and interest, emphasizing substantive compliance over technical lapses.

Sections Involved

  • Section 29, CGST Act, 2017 – Cancellation of Registration
  • Section 30, CGST Act, 2017 – Revocation of Cancellation
  • Rule 23, CGST Rules, 2017 – Procedure for Revocation
  • Section 50, CGST Act, 2017 – Interest on delayed payment

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/62701022024CW156162023_123313.pdf

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