Cancellation of GSTN due to Non-Filing of GST Returns: HC Sets aside Order in absence of GST Tribunal

Short facts are that the writ petitioner, who is in the business of providing works contract service, civil works, ground leveling and cleaning services was availing ‘Input Tax Credit‘ [‘ITC’] and the same was being utilized for payment of tax liability under ‘Central Goods and Services Tax Act, 2017’ [hereinafter ‘C-GST Act’ for the sake of convenience and clarity] read with ‘Central Goods and Services Tax Rules, 2017’ [hereinafter ‘C-GST Rules 2017′ for the sake of convenience]; that this C-GST regime kicked in on and from 01.07.2017; that the writ petitioner has been filing monthly returns under what is described as GSTR-1’ and ‘GSTR-3B’ and has been paying tax; that the writ petitioner could not file GSTR-3B for the period from March 2020 to December 2020 (10 months) and therefore, could not pay the applicable tax liability; that the jurisdictional ‘Assessing Officer’ [hereinafter ‘said AO’ for the sake of convenience and clarity] issued a notice alleging default being notice dated 15.11.2021 inter alia under Section 46 of C-GST Act for non-filing of returns GSTR-3B and not meeting the tax liability; that reply was sought within 15 days but writ petitioner – assessee admittedly, did not send any reply; that the said AO thereafter resorted to Best Judgment assessment and made an order dated 13.12.2021 ex parte for the period from March 2020 to December 2020 (10 months); that this order of said AO was carried in appeal by writ petitioner – assessee under Section 107 of C-GST Act to the Appellate Authority (first respondent in the captioned writ petition); that the first respondent – Appellate Authority afforded an opportunity of being heard to writ petitioner – assessee as per sub-section (8) of Section 107 of C-GST Act and made an ‘order dated 30.08.2022 in Order-in-Appeal No.299 of 2022’ [hereinafter ‘impugned order’ for the sake of convenience and clarity]; that there is a statutory appeal remedy inter alia under Section 112 of C-GST Act read with Section 110 of C- GST Rules but there is no disputation that the Tribunal has not been constituted and therefore, alternative remedy as of today, is unavailable; that the captioned writ petition has been filed assailing the impugned order made by the first respondent.

Learned counsel for writ petitioner – assessee assailed the impugned order primarily on the ground that the returns could not be filed for the aforementioned ten months period (March 2020 to December 2020) which shall hereinafter be referred to as ‘said period’ owing to Corona virus pandemic and consequent lock down, which is collectively referred to as ‘COVID 19 situation’ and none could neither portend nor presage the same is his further say. Learned counsel submitted that the other reason for the writ petitioner’s inability qua filing returns was registration of writ petitioner – assessee had been revoked.

Adverting to the impugned order of the first respondent – Appellate Authority, learned counsel submitted that Appellate Authority has taken note of this submissions but has ultimately negatived the appeal primarily on the ground that the returns were filed belatedly i.e., not within the prescribed time.

Learned Revenue counsel accepted notice, defended the impugned order and submitted that the Appellate Authority can also go into facts, Appellate Authority has in fact gone into the facts and sustained the Best Judgment Method that has been resorted to by jurisdictional AO.

It may not be necessary to be detained by rival submissions or by the facts any further in the light of paragraph No.5.10 of impugned order which reads as follows:

‘5.10. The appellant themselves have admitted that they had come under the adverse notice of the Headquarters Preventive Unit of Chennai South Commissionerate, resulting in verification of their accounts and records and investigation for plausible evasion of tax. Consequent to their visit, the appellant had worked out the tax liability for the period from March, 2020 to December, 2020. However, they filed their GSTR 1 and GSTR 3B Returns for the said period only on 12.04.2022 i.e., much after the lapse of time from passing the Assessment order dated 13.12.2021.’

The case of the writ petitioner – assessee is he could not file returns owing to certain circumstances which the assessee could neither portend nor presage. The Appellate Authority having noticed this submission has negatived the appeal for filing of returns belatedly on 12.04.2022 without saying reason for delay is unacceptable and without giving reasons as to why and how it is not acceptable. To be noted, the pivoted question is whether the assessee was justified in non-filing of returns within time. In this regard, it is to be noticed that learned Revenue counsel very vehemently submitted and pointed out that revocation of registration itself was a consequence of non-filing of returns and therefore, the assessee’s argument is a vicious cycle of sorts. The Appellate Authority should have given some dispositive reasoning on this aspect of the matter. The Appellate Authority should have gone into the reasons adduced by the writ petitioner – assessee regarding the belated filing of returns and should have returned a finding one way or the other. Absent the legal drill of returning such a finding, negativing the appeal on the ground of belated filing of returns, in the considered view of this Court tantamounts to begging the question. Therefore, on this limited or short point, this Court is inclined to interfere with the order of Appellate Authority. However, the Appellate Authority also is an authority which can go into facts as rightly pointed out by the learned Revenue counsel. Therefore, this Court deems it appropriate to set aside the impugned order and remit the matter back to Appellate Authority with a further directive to examine the matter on merits based on available records and based on opportunity already given to the writ petitioner – assessee under sub- section (8) of Section 107 of C-GST Act. This means that the Appellate Authority need not give opportunity of being heard to the writ petitioner – assessee again as the same has already been given, it is the discretion of the Appellate Authority. All that the Appellate Authority has to do is to articulate the dispositive reasoning qua aforesaid aspect of the matter. It is open to the Appellate Authority to articulate other reasons i.e., dispositive reasoning of other facets of the matter.

The above exercise shall be completed by the Appellate Authority as expeditiously as the official business of the first respondent –

Appellate Authority would permit and in any event within a period of three weeks from today i.e., on or before 27.12.2022. The order shall be communicated to the writ petitioner in usual manner / mode that is being adopted but in any event within five working days from the date of disposal under due acknowledgment. For clarity and specificity, it is set out that the impugned order being order dated 30.08.2022 in Order-in- Appeal No.299 of 2022 made by the first respondent – Appellate Authority is set aside and the matter is remanded back to the first respondent – Appellate Authority for fresh disposal in the aforesaid manner within a time of three weeks from today. Though obvious it is also made clear that this Court has not expressed any view or opinion on the merits of the matter and all the questions are left open to the first respondent – Appellate Authority to consider on merits and in accordance with law.

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