Court gives GST-registered company another chance to revoke cancellation of registration under new rules.

Caselaw Name: M/S. CUBICON BUILDING SERVICE PRIVATE LIMITED vs. STATE OF U.P. AND 3 OTHERS Key Takeaways: The court’s decision highlights the importance of following due process and giving taxpayers a fair opportunity to respond before cancelling their GST registration. It also underscores the need for tax authorities to consider changes in law and regulations when deciding cases. The case establishes that the Central Goods and Services Tax (Removal of Difficulties) Order, 2020, issued under Section 172 of the CGST Act, is binding on tax authorities. Issue: Whether the orders cancelling the assessee’s GST registration and dismissing their appeal against the cancellation should be set aside in light of the Central Goods and Services Tax (Removal of Difficulties) Order, 2020. Facts: M/s Cubicon Building Service Private Limited had a GST registration, which was cancelled by the Assessing Authority on 24.12.2018 under Section 29(2)(c) of the CGST Act. The assessee filed an application for revocation of the cancellation order, which was rejected on 27.05.2019. The assessee then filed a first appeal under Section 107 of the CGST Act, which was dismissed on 22.01.2020. In the absence of a Tribunal, the assessee filed a writ petition before the Allahabad High Court, arguing that the orders of the Assessing Authority and the First Appellate Court could not be sustained in view of the Central Goods and Services Tax (Removal of Difficulties) Order, 2020, issued under Section 172 of the CGST Act. Arguments: The assessee’s counsel argued that the orders cancelling the GST registration and dismissing the appeal could not be sustained due to the Central Goods and Services Tax (Removal of Difficulties) Order, 2020, which extended the deadline for filing revocation applications in certain cases. Key Legal Precedents: The court cited and relied on the Central Goods and Services Tax (Removal of Difficulties) Order, 2020, issued under Section 172 of the Central Goods and Services Tax Act, 2017. The relevant portion of the order states: “For the removal of difficulties, it is hereby clarified that for the purpose of calculating the period of thirty days for filing an application for revocation of cancellation of registration under sub-section (1) of section 30 of the Act for those registered persons who were served notice under clause (b) or clause (c) of sub-section (2) of section 29 in the manner as provided in clause (c) or clause (d) of sub-section (1) of section 169 and where cancellation order was passed up to 12th June, 2020, the later of the following dates shall be considered: a) Date of service of the said cancellation order; or b) 31st day of August, 2020.” Judgement: The Allahabad High Court set aside the orders dated 27.05.2019 (rejecting the revocation application) and 22.01.2020 (dismissing the appeal) passed by the respective authorities. The court directed the authorities to decide the assessee’s application dated 10.05.2019 for revocation of the cancellation order dated 16.04.2019 in accordance with the law within 15 days from the date of production of the court’s order. The writ petition was disposed of. FAQs: Q1. What was the main issue in this case? A1. The main issue was whether the orders cancelling the assessee’s GST registration and dismissing their appeal against the cancellation should be set aside in light of the Central Goods and Services Tax (Removal of Difficulties) Order, 2020, which extended the deadline for filing revocation applications. Q2. What was the court’s decision? A2. The court set aside the orders cancelling the assessee’s GST registration and dismissing their appeal. It directed the authorities to reconsider the assessee’s application for revocation of the cancellation order in accordance with the law and the Central Goods and Services Tax (Removal of Difficulties) Order, 2020. Q3. What was the significance of the Central Goods and Services Tax (Removal of Difficulties) Order, 2020? A3. This order, issued under Section 172 of the CGST Act, extended the deadline for filing applications for revocation of GST registration cancellation in certain cases. The court held that the tax authorities were bound to consider this order while deciding the assessee’s case. Q4. What does this case mean for taxpayers whose GST registration has been cancelled? A4. This case highlights that taxpayers whose GST registration has been cancelled may have an opportunity to file for revocation of the cancellation order, even if the initial deadline has passed, if there are changes in the law or regulations that extend the deadline. Q5. What is the key legal principle established in this case? A5. The key legal principle established is that tax authorities must consider changes in law and regulations while deciding cases and cannot solely rely on the earlier position of law or their initial orders if the law has been amended or clarified subsequently.

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Counter affidavit filed today by the learned Standing Counsel be kept on record.

The defects reported by Stamp Reporter are being ignored due to prevailing Covid-19 infection. Counsel for the petitioner may remove the defects as and when Covid-19 infection subsides.

The petitioner had a registration under the Goods and Services Tax Act, 2017, which when the Assessing Authority cancelled on 19.9.2019 under Section 29(2)(c) of the Goods and Services Tax Act, 2017(hereinafter referred to as 'the Act), the petitioner filed an application for the revocation of the cancellation order. When, however, the application was rejected on 10.1.2020, the petitioner filed a First Appeal under Section 107 of the Act. Upon the dismissal of the First Appeal on 13.2.2020, in the absence of Tribunal, the instant writ petition was filed.

The contention of the learned counsel for the petitioner is that the orders of the Assessing Authority and of the First Appellate Court cannot be sustained now in view of the Central Goods and Services Act (Removal of Difficulties Order), 2020 issued under Section 172 of the Act.

Since the learned counsel for the petitioner read out the Gazette Notification issued on 25.6.2020, the relevant portion of the notification is being reproduced here as under:-

"NOW, THEREFORE, in exercise of the powers conferred by section 172 of the Central Goods and Services Tax Act, 2017, the Central Government, on the recommendations of the Council, hereby makes the following Order, to remove the difficulties, namely:-

1. Short title.- This Order may be called the Central Goods and Services Tax (Removal of Difficulties) Order, 2020.

2. For the removal of difficulties, it is hereby clarified that for the purpose of calculating the period of thirty days for filing application for revocation of cancellation of registration under sub-section (1) of section 30 of the Act for those registered persons who were served notice under clause (b) or clause (c) of sub-section (2) of section 29 in the manner as provided in clause (c) or clause (d) of sub-section (1) of section 169 and where cancellation order was passed up to 12th June, 2020, the later of the following dates shall be considered:-

a) Date of service of the said cancellation order; or

b) 31st day of August, 2020."

Learned Standing Counsel did not dispute that the Gazette Notification.

Under such circumstances, the order dated 10.1.2020 passed by the Assessing Authority and the Appellate Order dated 13.2.2020 are set aside. The application dated 7.12.2019, which was filed by the petitioner for the revocation of the cancellation order dated 19.9.2019, shall now be decided in accordance with law within a period of 15 days from the date of production of a copy of this order.

The Authority concerned may verify the correctness of this order from the Official Website of the High Court, Allahabad, if a certified copy is not submitted.

The writ petition is disposed of.

Order Date :- 7.7.2020

PK