The Hon’ble Allahabad High Court in its recent ruling in the case of Ansari Construction vs. Additional Commissioner, CGST (Appeals) & Ors. [Writ Tax No. 626 of 2020] has set aside ex-parte order seeking to cancel assessee’s registration for failure to file return for continuous 6 months as well as the order dismissing revocation application and affirming cancellation of registration.
Further, the Court ordered the Assistant Commissioner to pay a cost of Rs. 10,000/- from his own salary for unnecessarily harassing the assessee.
Facts of the case:
- The petitioner M/s Ansari Construction is a proprietorship firm, engaged in the business of providing constructions services, who was served Show Cause Notice (SCN) dated November 21, 2019 by the Assistant Commissioner (Respondent No. 2) proposing to cancel the registration certificate of the Petitioner mainly on the ground that the petitioner has failed to file the return for a continuous period of 6 months.
- In pursuance of the said notice, an ex-parte order was passed cancelling the registration of the Petitioner by invoking the powers under Section 29(2)(5) of the CGST Act.
- The Petitioner filed an application under Section 13 of CGST Act for revocation of cancellation of registration on the ground that the Petitioner had submitted all the pending returns under GSTR-3B and GSTR-1 and, thus, the entire tax liability stood clear with the late fees.
- In response to the application filed by the petitioner, the Respondent No. 2 issued a SCN calling upon the Petitioner to show cause on the reason of furnishing a reply to the notice, failing which the application of the Petitioner shall be decided on ex-parte on the basis of the available records on merits.
- Despite the Petitioner having replied, the Respondent No. 2, issued an order (OIO) and rejected the application for revocation of registration.
- Aggrieved against the said order, the Petitioner preferred an appeal before the Appellate Authority, (Respondent No. 1) which was dismissed and it affirmed the order of Respondent no. 2, vide its Order in Appeal (OIA) wherein the appellate authority relied upon the mail issued by a division office to the effect that taxpayer did not upload any documents online while replying to the query and as the petitioner had simply stated that all the liabilities have been cleared by them even they have not disclosed as to on what date they filed return and did not enclose the copy filed by them and the tax payer simply made claims without producing proper evidence which cannot be verified by the division office at this stage.
- Aggrieved by the order of the Appellate Authority, this present writ petition has been filed.
Issue raised before High Court:
Whether the Respondents were correct in rejecting the application for revocation of cancellation of registration and affirming the OIO, despite the requisite documents evidencing the filing of returns as well as the tax and late fees was submitted?
Order of Allahabad High Court: Deliberation and Ruling
- Section 29 (2)(c) of CGST Act clearly provides for cancellation of registration if the assessee fails to furnish the returns for a continuous period of six months and invoking the said clause, the registration of the Petitioner was cancelled as on November 30, 2019.
- Section 30 of the CGST Act provides a remedy to the person whose registration has been cancelled and in terms of the remedy so provided the Petitioner approached the authority for revocation of the registration within the times specified therein. In terms of the proviso to Rule 23(1) a burden is cast upon the assessee to furnish returns and to ensure that the tax dues is paid along with any due interest penalty and late fees and no further burden is cast upon the assessee or the persons seeking revocation.
- In the present case along with the application, the Petitioner had filed a statement to the effect that all the requisite returns have been filed and the dues are cleared and thus it was incumbent upon the Department to have verified the correctness of averments made in the application.
- The Court noted that the taxpayer has filed GSTR-3B upto November 2019 and further there are no dues pending towards tax, late fee, interest upto November 2019 and there are no dues of taxpayer pending upto November 2019.
- Stated that, the Department has miserably failed to verify the facts from their own records and proceeded to issue a SCN. The manner in which the SCN has been issued is wholly unacceptable as it does not record any shortcoming on the part of the Petitioner. It is not conceivable as to what was required in the SCN and it clearly highlights the fact that serious quasi-adjudicatory functionaries are being discharged by persons who do not have a legally trained mind and are entrusted in discharging functions affecting huge revenues.
- Condemns the callous manner of the Respondents in which the Petitioner has been harassed by approaching one forum after the other and wasting his considerable financial resources as well as time. Further, the Court stated that, the OIO passed by the Respondent No. 2 rejecting the application of the Petitioner is wholly arbitrary and demonstrates the lack of legally trained mind as there appears to be no effort to verify the correctness of the assertions made by the Petitioner at the end of the Department. Even, the Appellate Authority has also committed the same manifest arbitrariness in deciding the appeal, the recording of the reason that facts cannot be verified at the appellate level is wholly arbitrary and militates against the whole purpose of statutory appeal under an enactment. The Court cannot overlook the mutually contradictory stands taken by the Department before the Appellate Authority on one hand and the instructions given to this Court.
In light of above deliberations the Hon’ble Allahabad High Court allowed the writ petition and held that, now the Department has accepted that the returns were filed within time and no dues remain payable, the original order as well as order in appeal deserves to be set aside with a direction to allow the application for revocation of registration filed by the petitioner. Consequently, the order cancelling the registration stands revoked from the date of filing of the application before the respondent no. 2.
Further the Court held that in view of the specific findings recorded above to the effect that the petitioner was unnecessarily harassed, the writ petition is allowed with a cost of Rs. 10,000/- to be paid to the petitioner within 30 days by the respondent no. 2 from his own salary.
READ / DOWNLOAD ORDER:
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
