Revocation of GST Registration Can't Be Rejected Solely For Delay In Moving Revocation Application: Allahabad High Court

The Allahabad High Court has held that the rejection of registration solely on the ground of delay in moving the revocation application is not sustainable in law when the entire tax is deposited.

The single bench of Justice Rohit Ranjan Agarwal has observed that once the department has accepted the return and there are no outstanding dues, the department should not obstruct the business of an assessee.

The petitioner/assessee is registered under the U.P. Goods and Services Tax Act, 2017. Due to the non-filing of the return by the petitioner, a show cause notice was issued by the Department, which remained unattended by the petitioner, and the registration of the firm stood cancelled. The show cause notice stated that there was an outstanding central tax and State Tax/UT Tax. The petitioner deposited the amount. A revocation application was preferred by the petitioner as required under Rule 23 of the U.P. GST Rules, 2017, in Form GST REG-21.

The Taxing Authority rejected the revocation application of the petitioner on the ground that he had not filed the return within the required time. The petitioner filed an appeal with the Additional Commissioner against the order rejecting the revocation application. The first appeal was dismissed.

The petitioner submitted that the finding recorded by the First Appellate Authority was to the contrary, as the entire payment was made by the petitioner on 3.1.2021 and the return was also filed. The reason recorded in rejecting the revocation application was wrong: the petitioner has not filed a return, though one was filed when the disputed amount of tax was deposited by the petitioner or assessee.

The department relied on the provisions of Rule 23 of the 2017 Rules, in which it is provided that the revocation application against the cancellation of registration has to be moved within 30 days. As the registration was cancelled in 2019 and the revocation application was filed in 2021, the Assistant Commissioner, as well as the Appellate Authority, have rightly rejected the revocation application of the petitioner.

As per Rule 23 of the U.P. GST Rules, 2017, it has been specifically mentioned that the revocation application has to be preferred within 30 days from the date of service in order to cancel the registration.

The court noted that the purpose of including the provision under Rule 23 regarding service of notice on the assessee is to give him the opportunity to file a revocation application in order to keep the registration from being permanently cancelled and his business from being hampered.

The court ruled that the appellate authority has not recorded any categorical finding as to the service of notice and, merely on the ground that the application was time-barred, proceeded to uphold the order of rejection of the revocation application.

Case Title: Umesh Kumar Versus State Of U.P. [Writ Tax No. - 648 of 2021]

Citation: 2022 LiveLaw (AB) 513 

Date: 25.11.2022

Counsel For Petitioner: Advocate Puneet Arun

Counsel For Respondent: C.S.C.

Click Here To Read Order