Assessee should not be left without remedy due to non-constitution of GST Tribunal

The Hon'ble Telangana High Court in M/s. Southern Enterprises v. Appellate Joint Commissioner ST [W.P. No. 2471 of 2023 dated January 31, 2023] hasset aside the order cancelling GST Registration of the assessee due to non-filing of GST Returns for the continuous period of 6 months, on the ground that the GST Tribunal has not been constituted and the assessee should not be left without remedy. Remanded the matter back to the Revenue Department to decide the matter afresh in accordance with the law and to provide reasonable opportunity of hearing to the assessee. Further, permitted the assessee to submit the GST Returns as per the statute. 

Facts

M/s. Southern Enterprises ("the Petitioner") is a proprietorship firm engaged in the business of sale and offering service of air conditioners. The Petitioner was issued a Show Cause Notice ("SCN") dated November 9, 2020 ("the Impugned SCN") by the Revenue Department ("the Respondent") due to the non-filing of GST Returns for the continuous period of 6 months.  A reply dated November 19, 2020 was submitted, however it was not considered satisfactory by the Respondent therefore, the GST Registration of the Petitioner was cancelled under Section 29 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") vide Order-in-Original dated December 10,2020 ("the OIO"). 

Subsequently, an appeal was filed by the Petitioner, which was rejected by the Appellate Authority vide Order-in-Appeal dated January 11, 2023 ("the OIA") on the grounds that it was filed beyond the period of limitation.
Being aggrieved, this petition has been filed contending that, 

Issue

Whether the cancellation of GST Registration of the Petitioner is sustainable?

Held

The Hon'ble Telangana High Court in W.P. No. 2471 of 2023 held as under:

• Noted that, since no GST Tribunal has been constituted in the State of Telangana in terms of Section 112 of the CGST Act,this writ petition has been filed. Further, the issue is no longer res integra.
• Relied on its earlier judgment in M/s. ChennaKrishnamaCharyuluKarampudi v. Additional Commissioner (Appeals-1) [Writ Petition No. 27071 of 2022 dated June 27, 2022], wherein, the Court remanded the matter back to the primary authority for reconsideration and did not express any opinion on the merits of the case as the GST Registration of the assessee was cancelled on the ground of non-filing of returns and as GST Tribunal was not constituted under Section 109 of the CGST Act, Petitioner was left without any remedy. 
• Held that, since there is no GST Tribunal in the State of Telangana and the Petitioner should not be left without remedy, it would be just and proper if the entire matter is remanded back to Respondent to reconsider the case of the Petitioner and thereafter to pass appropriate order in accordance with law.
• Set aside the OIO and the OIA.
• Remanded the matter back to the Respondent for the fresh decision in accordance with the law and to provide reasonable opportunity of hearing to the Petitioner. 
• Permitted the Petitioner, to submit the GST Returns as per the statute. 

Relevant Provisions

Section 29 of the CGST Act

"Cancellation or suspension of registration-

(1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where,––

(a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or

(b) there is any change in the constitution of the business; or

(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to optout of the registration voluntarily made under sub-section (3) of section 25:
Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.

(2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,––

(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed; or
(b) a person paying tax under section 10 has not furnished the return for a financial year beyond three months from the due date of furnishing the said return; or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for such continuous tax period as may be prescribed; or
(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:

Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard.

Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed.

(3) The cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.

(4) The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration under this Act.

(5) Every registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed:

Provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery under section 15, whichever is higher.

(6) The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed."