NATIONAL LAW UNIVERSITY,

JODHPUR

ASSIGNMENT

(Towards the fulfilment of the CA in the subject of indirect taxation)

Submitted By: Submitted To:

Jai Kirti Dr. Manoj Kumar Singh
UG Semester IX Faculty of Law
Section B National Law University,
Roll No.: 1211 Jodhpur.

SUMMER SESSION
(JULY - NOV, 2019)
 Now to address the issue given as the topic of this assignment, it is pertinent to ask whether the
proper officer has the power to cancel the registration certificate obtained under the CGST/SGST
Act on his own?

Answer to this is yes, in certain circumstances specified under section 29(2) of the CGST/SGST
Act, the proper officer can cancel the registration on his own. Such circumstances include
contravention of any of the prescribed provisions of the CGST Act or the rules made there under,
not filing return by a composition dealer for three consecutive tax periods or non-furnishing of
returns by a regular taxpayer for a continuous period of six months (which we will be dealing
with), and not commencing business within six months from the date of voluntary registration.
However, before cancelling the registration, the proper officer has to follow the principles of
natural justice. (Proviso to Section 29(2))1

To go further into this issue let us first understand what the burden on the assesse is in relation to
maintenance of records pertaining to returns filed under the said acts.

Assessment in GST is mainly focused on self-assessment by the taxpayers themselves. Every

taxpayer is required to self-assess the taxes payable and furnish a return for specified tax periods
i.e. the period for which return is required to be filed. The compliance verification is done by the
department through scrutiny of returns, audit and/or investigation. Thus, the compliance
verification is to be done through documentary checks rather than physical controls. This requires
certain obligations to be cast on the taxpayer for keeping and maintaining accounts and records.
As per section 35 of CGST Act every registered person shall keep and maintain, at his principal
placed of business as mentioned in the certificate of registration, a true and correct account of:
 Production or manufacture of goods
 Inward and outward supply of goods or service or both
 Stock of goods
 Input tax credit availed
 Output tax payable and already paid. and

registered persons2 must also maintain an account containing the following details:

 Tax payable
 Tax collected and paid
 Input tax and input tax credit claimed

1
FAQs on GST circular number 17 dated 15th dec. 2018
2
person other than person falling u/s 10 (composition levy)
  Register of tax invoice, credit note, debit note, and delivery challan issued or received
during any tax period.

So it is agreed here from the above mentioned provisions and requirements that if a registered
person has failed to provide returns being a regular taxpayer for a continuous period of six months,
his registration certificate can be revoked. However the issue we face in the factual matrix is while
the order of cancellation was made six months after the issuance of show-cause notice, the assesse
in the interim period had filed all returns except for one. So is this still sufficient reason to cancel
the registration, as show-cause mentioned that ex-parte order will be on “available record3 and
merit”4. Since the order was passed six months after the show-cause and almost all returns had
been filed by then, shouldn’t the assesse be given the benfit of doubt based on merit if the case?
Especially since CBIC has advised that the period of 30-day of the occurrence of the event
warranting the cancellation is over, the deadline may be liberally interpreted and the taxpayers’
application for cancellation of registration may not be rejected because of the possible violation of
the deadline as it may be difficult to pinpoint the date on which event occurs in all cases 5. So in
cases like the present one where the proper officer is cancelling the registration there should also
be a liberal interpretation of the provisions to benefit the assesse?

Let us look at a case to try and understand answer to that question,

In the case of M/s Banyan projects India pvt ltd. vs local goods and services tax officer 6 , The
petitioner had challenged the order passed by the respondent whereby the registration of the
petitioner under the provisions of the Karnataka Goods and Services Act, 2017 had been cancelled.
The grievance of the petitioner was that no adequate opportunity was provided to put forth its
explanation for not furnishing the returns well within time from October, 2018 to April 2019, the
reason for which the Registration Certificate had been cancelled by the respondent. The court held
that the primary reason for cancellation of the Registration Certificate was non-filing of the
required returns for the months October 2018 to April 2019, the respondent - authority being
empowered to revoke the cancellation of registration under Section 30 of the Act, if such returns

3 section 40 (7)- All liabilities of a taxable person under this Act shall be recorded and maintained in an electronic
liability register in such manner as may be prescribed.

4 factual matrix of assignment question

5 Circular No. 69/43/2018-GST dated 26th October 2018,
6 Writ Petition No.22374/2019 at High Court of Karnataka
for the aforesaid periods are submitted by the petitioner within a time frame which would be fixed
by the Court, the same shall be considered by the respondent and the cancellation of the registration
can be revoked in terms of Section 30 of the Act. Court further went on to say that this was what
it saw as being required to meet ends of justice.

Now in cases where the initial cancellation has been done by the proper officer suo moto, and not
on the request of the taxable person or his legal heirs. A person whose registration has been
cancelled suo moto can apply to the proper officer for revocation of cancellation of registration
within 30 days from the date of communication of the cancellation order. The proper officer may
within a period of 30 days from the date of receipt of application for revocation of cancellation or
receipt of information/clarification, either revoke the cancellation or reject the application for
revocation of cancellation of registration7.

Such application has to be filed electronically in FORM GST REG 21. But there is a rider also.
No application for revocation shall be filed if the registration has been cancelled for the failure of
the taxable person to furnish returns, unless such returns are filed and any amount due as tax, in
terms of such returns has been paid along with any amount payable towards interest, penalties and
late fee payable in respect of the said returns.

So we can see that the court had adopted a liberal interpretation of the provisions to benefit the
assesse. Another decision which shows us that the govt. intended the said act to be a beneficial
legislation was its decision to waive late fees for non-filers of summary and final sales returns for
the July 2017-September 2018 period by businesses registered under the goods and services tax
(GST). However, these businesses would have to file their returns for the 15-month period by
March 31, 2019, the Central Board of Indirect Taxes and Customs (CBIC) said. Giving effect to
the decision of the GST Council in its December 22 meeting, CBIC notified waiver of late fees for
non filing of GSTR-3B, GSTR-1 and GSTR-4 and non-payment of taxes between July 2017 and
September2018.8

Since the act in question is relatively new, let us look at some cases prior to the enactment of the
act which would give as an insight into how the courts have previously interpreted provisions of

7Section 30, CGST ACT 2017

8https://economictimes.indiatimes.com/news/economy/policy/govt-waives-late-fee-for-non-filers-of-gst-returns-
between-july-17-sept-18/articleshow/67339080.cms
indirect taxation legislations regarding delay in filing returns and their consequences.

In the case of M/s. KAUSHAL CONSTRUCTION CO. vs C.C.E., PANCHKULA 9 there was a
delay in filing of returns and even the appeal did not take place within the specified time limit. It
was opined by the tribunal that while there are no upper or lower limits which could be considered
for condonation, in all cases what is important is that the application for condonation of delay must
not reveal a casual or laconic approach to pursuing further remedies against an order one is
aggrieved by. Even though an adverse order was passed in this case, it is more important to rely
on the principle which is being laid down here. This principle was also seen in the case of M/s.
M.V Engineering Works vs CEE Allahabad10 which held that “the general norm that should guide
the exercise of discretion in the matter of condonation of delay is the ascertainment of whether the
litigant who seeks condonation has exhibited the necessary degree of diligence in pursuing what
is a serious occupation i.e. litigation. While there are no upper or lower limits which could be
considered for condonation, in all cases what is important is that the application for condonation
of delay must not reveal a casual or laconic approach to pursuing further remedies against an
order one is aggrieved by.”

So we can see from the various cases (including previous stance of courts), notifications of the
govt. etc. that the view taken by them is a liberal one in the interpretation of provisions regarding
cancellations/delays etc. so in the present factual matrix it would be correct to say that since the
order was passed 6 months after the issuance of the show cause notice, during which time all
returns except one had been filed , the returns filed during this time should be construed as
available records and even if that is not the case, revocation of the cancellation order under section
30 of the CGST Act should be done after asking the assesse to give the remaining return along
with any fine or fee as applicable.

9
2014 (4) ECS (170) (Tri.- Del.)

10
2014 (1) ECS (185) (tri – Del.)