Facts of the Case

The Petitioner, M/s. GKV Sharma, challenged a communication dated 29 April 2022, which indicated non-payment of interest, late fee and penalty, as well as ineligible Input Tax Credit, for the period from July 2017 to January 2021. The writ petition was filed under Article 226 of the Constitution of India seeking intervention of the High Court.

Earlier, the Petitioner’s Registration Certificate had been cancelled under Section 29 of the Central Goods and Services Tax Act, 2017. Against such cancellation, the Petitioner had approached the High Court in W.P.(C) No. 33418 of 2021.

By order dated 1 December 2021, the High Court had condoned the delay in invoking the proviso to Rule 23 of the CGST Rules, 2017 and directed that, subject to the Petitioner depositing all taxes, interest, late fee and penalty due and complying with other formalities, the application for revocation would be considered in accordance with law. The earlier order further contemplated opening of the portal to enable filing of GST returns upon compliance with the prescribed conditions.

In compliance with the earlier direction, the Petitioner deposited:

  • Rs. 26,13,132/- towards tax
  • Rs. 3,63,990/- towards interest
  • Rs. 60,000/- towards penalty

Thereafter, the Petitioner requested the Assistant Commissioner, GST, Central Excise & Customs to take necessary action in terms of the High Court’s earlier order. However, according to the Petitioner, the Opposite Parties failed to implement the direction requiring opening of the GST portal for filing returns.

The Petitioner further contended that while the earlier writ petition related to the tax period from July 2019 to September 2019, the subsequent communication dated 29 April 2022 expanded the alleged period of non-payment from July 2017 to January 2021.

Issues Involved

The principal issues before the High Court were:

  1. Whether the GST authorities were required to revoke the cancellation of the Petitioner’s Registration Certificate after compliance with the earlier High Court direction and deposit of the requisite tax, interest and penalty.
  2. Whether the authorities could fail to open the GST portal and prevent filing of GST returns despite the Petitioner’s asserted compliance with the conditions imposed by the earlier judicial order.
  3. Whether the communication dated 29 April 2022 could refer to alleged non-payment for the broader period from July 2017 to January 2021 when the earlier proceedings concerned the period from July 2019 to September 2019.
  4. Whether the Proper Officer was required to exercise power under Section 30 of the CGST Act, 2017 read with Rule 23 of the CGST Rules, 2017 for revocation of cancellation of registration.
  5. Whether the Petitioner was entitled to facilitation for filing GST returns through opening of the GST portal.

Petitioner’s Arguments

The Petitioner submitted that the earlier cancellation of the Registration Certificate under Section 29 of the CGST Act, 2017 had already been challenged in W.P.(C) No. 33418 of 2021.

It was argued that the High Court, by order dated 1 December 2021, had condoned the delay in seeking revocation under the proviso to Rule 23 of the CGST Rules, 2017 and had directed consideration of the revocation application upon payment of taxes, interest, late fee and penalty and compliance with other formalities.

The Petitioner asserted that it had complied with the Court’s direction by depositing Rs. 26,13,132/- as tax, Rs. 3,63,990/- as interest and Rs. 60,000/- as penalty.

Accordingly, it was argued that the authorities were obliged to comply with the earlier direction and open the GST portal to enable filing of returns.

The Petitioner further contended that the earlier writ petition concerned the period from July 2019 to September 2019, whereas the subsequent communication dated 29 April 2022 showed alleged non-payment for the much wider period from July 2017 to January 2021.

The Petitioner maintained that, having deposited the requisite tax, interest and penalty pertaining to the relevant period, the Opposite Parties were under an obligation to facilitate filing of returns by revoking the cancellation of the Registration Certificate.

Respondent’s Arguments

The Opposite Parties were represented by the learned Senior Standing Counsel for the CT & GST Organization.

Significantly, the learned Senior Standing Counsel did not object to the proposition advanced by the Petitioner’s counsel.

The Court recorded the concession of counsel for the respective parties concerning deposit of the requisite amounts pertaining to the period from July 2019 to September 2019, as per the communication dated 17 October 2020.

Court Order / Findings

The Orissa High Court observed that the requisite amounts pertaining to the period from July 2019 to September 2019 had been deposited, as conceded by counsel for the respective parties and with reference to the communication dated 17 October 2020.

The Court held that the Opposite Parties were required to facilitate the Petitioner in filing GST returns by opening the GST portal.

The High Court specifically directed that:

  1. In exercise of powers under Section 30 of the CGST Act, 2017 read with Rule 23 of the CGST Rules, 2017, the Proper Officer shall revoke the order cancelling the Registration Certificate.
  2. The payments asserted by the Petitioner in the writ petition shall be subject to verification by the Proper Officer.
  3. Subject to such verification, the concerned authority shall pass necessary orders revoking the cancellation of the Registration Certificate.
  4. The Petitioner shall be allowed to file GST returns within a period of two weeks from the date of production of the certified copy of the order.

With these observations and directions, the writ petition was disposed of.

Important Clarification

The judgment provides an important clarification that where a taxpayer has complied with the conditions imposed under an earlier judicial order by depositing the requisite tax, interest and penalty, the GST authorities are required to act upon such compliance in accordance with law.

The ruling also clarifies that revocation of cancellation of GST registration under Section 30 of the CGST Act read with Rule 23 of the CGST Rules must be operationally implemented where the applicable conditions are satisfied. A direction for revocation would be ineffective if the taxpayer is not simultaneously facilitated to file the required GST returns.

However, the relief granted by the Court was expressly made subject to verification of the payments asserted in the writ petition by the Proper Officer. Therefore, the decision should not be understood as dispensing with verification of statutory compliance or payment records.

A further significant aspect is that the earlier proceeding related to July 2019 to September 2019, whereas the impugned communication dated 29 April 2022 referred to alleged non-payment for July 2017 to January 2021. The Court’s operative direction focused on the requisite amounts pertaining to July 2019 to September 2019 and the consequential revocation and return-filing facility.

Sections and Legal Provisions Involved

Section 29 of the CGST Act, 2017 – Cancellation or suspension of GST registration.

Section 30 of the CGST Act, 2017 – Revocation of cancellation of registration.

Rule 23 of the CGST Rules, 2017 – Procedure governing revocation of cancellation of registration.

Proviso to Rule 23 of the CGST Rules, 2017 – Referred to in the context of condonation of delay in the earlier proceedings.

Article 226 of the Constitution of India – Constitutional writ jurisdiction of the High Court.

Related Case Law / Earlier Connected Proceeding

M/s. GKV Sharma – W.P.(C) No. 33418 of 2021, Order dated 01.12.2021

The present case is directly connected with the Petitioner’s earlier writ petition, W.P.(C) No. 33418 of 2021. In that proceeding, the High Court dealt with the cancellation of the Petitioner’s GST Registration Certificate under Section 29 of the CGST Act.

The High Court had condoned the delay in invoking the proviso to Rule 23 of the CGST Rules and directed that, subject to payment of taxes, interest, late fee and penalty due and compliance with other formalities, the Petitioner’s application for revocation should be considered in accordance with law.

The earlier order also required the Proper Officer, subject to compliance by the Petitioner, to open the portal to enable filing of the GST return.

The present writ petition arose because the Petitioner asserted that, despite depositing the required amounts and complying with the earlier order, the authorities had failed to facilitate return filing and instead issued the communication dated 29 April 2022 referring to alleged dues over an expanded period.

Thus, the earlier order dated 01.12.2021 formed the direct judicial foundation for the relief granted in the present case.

Link to download the order -https://mytaxexpert.co.in/uploads/1783669248_3056.pdf

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