GST registration cancelled due to non-filing of returns to be restored on filing of returns along with the tax and penalty

The Hon'ble Madras High Court in M/s Immanuvel Dharmaraja Store v. Appellate Deputy Commissioner (GST) [W.P. (MD) No. 23179 of 2022 dated October 10, 2022] has held that, GST registration shall be revived, in case where the GST Registration of the assessee was cancelled due to non-filing of returns for a long period and later on the assessee had paid the tax and the penalty.

Facts

M/s Immanuvel Dharmaraja Store (“the Petitioner”) failed to file the monthly returns for the period from June 2019 to August 2021. Therefore, a Show Cause Notice (“SCN”) dated May 24, 2019 was issued by the Assistant Commissioner seeking explanation for non-filing of the returns. Thereafter, the registration of the Petitioner was cancelled in view of Section 29 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) on September 5, 2019 with effect from March 31,2018. 
Subsequently, the Petitioner paid dues from June 2019 to August 2021 including the tax amount and penalty and further, submitted that he was unable to pay tax from September 2021, till the registration was cancelled. The Petitioner filed an appeal before the Appellate Deputy Commissioner (“the Respondent”) which was rejected on the ground of limitation. 

Hence, this petition had been filed. 

Issue

Whether the Petitioner is entitled to restore its registration on the ground that the tax is paid with penalty?

Held

The Hon'ble Madras High Court in W.P. (MD) No. 23179 of 2022 held as under:

• Relied on its earlier judgment in Tvl. Suguna Cutpiece v. Appellate Deputy Commissioner (ST) (GST) and others (W.P.Nos. 25048, 25877, 12738 of 2021 & Ors., dated January 31, 2022) wherein it was held that, where registration of assessee was cancelled due to non-filing of returns for a long period and later on the assessee paid tax and penalty, its registration shall be revived. 
• Held that, the benefit extended by the Court in its earlier orders may be extended to the Petitioner and the registration of the Petitioner shall be revived.

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 opt out 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."