M/S. Durga Raman Patnaik vs Additional Commissioner on 13 October, 2022

1. Outcome

The writ petition was allowed. The High Court set aside the order of the Additional Commissioner of GST (Appeals) dated 07.10.2021.

The Court directed the following as a one-time measure:
1. The petitioner is permitted to file all pending returns and pay the associated taxes, interest, penalties, and late fees within 60 days. This payment cannot be adjusted from any unutilized Input Tax Credit (ITC).
2. Upon compliance, the petitioner can file an application for revocation of cancellation of registration.
3. The Proper Officer is directed to favorably consider the application, condone the delay, and revoke the cancellation of the petitioner's GST registration.
4. The GST Network (GSTN) authorities are to make necessary technical changes to their portal to facilitate the petitioner's compliance.

2. Core Issue

Whether the High Court, in its writ jurisdiction under Article 226, can grant relief to a taxpayer whose GST registration was cancelled for non-filing of returns and whose subsequent appeal was dismissed by the Appellate Authority on the grounds of being time-barred, particularly in light of the difficulties faced by taxpayers during the initial GST implementation phase and the COVID-19 pandemic.

A secondary issue was the maintainability of the writ petition in the absence of a functional GST Appellate Tribunal.

3. Key Facts

1. Petitioner: M/S. Durga Raman Patnaik, a proprietorship concern registered under the CGST Act, 2017.
2. Cancellation Order: The Superintendent (Registering Authority) cancelled the petitioner's GST registration on 15.10.2019 under Section 29(2)(c) of the CGST Act, due to non-filing of returns for a continuous period of six months.
3. Remedy Availed: Instead of filing an application for revocation of cancellation under Section 30 of the CGST Act, the petitioner filed an appeal under Section 107.
4. Delay: The appeal was filed on 05.08.2021, with a delay of approximately 660 days from the date of the cancellation order.
5. Appellate Order: The Additional Commissioner of GST (Appeals) rejected the appeal on 07.10.2021, holding it to be barred by limitation.
6. Writ Petition: The petitioner challenged the Appellate Authority's order of rejection before the High Court of Orissa.

4. Arguments

Petitioner's Arguments:
* The Appellate Authority adopted a pedantic and overly strict view of limitation, ignoring the genuine difficulties faced by small taxpayers during the nascent stages of GST and the subsequent COVID-19 pandemic.
* The government's benevolent intent is evident from various amnesty schemes and notifications (e.g., Notification No. 19/2021, 34/2021) that extended deadlines and waived late fees.
* The COVID-19 pandemic was a force majeure event, and the Supreme Court's suo motu orders extending limitation periods should be considered applicable.
* The petitioner is willing to pay all outstanding taxes, interest, penalties, and late fees to have the registration restored.

Respondent's (GST Department's) Arguments:
* The respondent counsel conceded that if the petitioner deposits all required taxes and dues and files all pending returns, the Registering Authority could consider an application for revocation of registration.

Amicus Curiae's (Mr. Rudra Prasad Kar) Arguments:
* GST is a new law, and assessees faced genuine procedural difficulties, which were exacerbated by the pandemic.
* The legislative intent is to facilitate business, not to permanently debar assessees from the GST regime. Keeping them out is counter-productive to revenue collection.
* Denying the right to carry on trade and commerce would violate fundamental rights under Articles 14, 19(1)(g), and 21 of the Constitution.

5. Court’s Reasoning

1. Pragmatic and Benevolent Approach: The Court observed that the government's intention, as reflected in various notifications and amnesty schemes, has been to facilitate taxpayers and bring them back into the GST fold. Refusing to restore registration on grounds of limitation is a "counter-productive approach" that harms revenue collection, as a de-registered person cannot issue tax invoices.
2. Impact of COVID-19 and Supreme Court Orders: The Court placed significant reliance on the series of suo motu orders by the Hon'ble Supreme Court (in Cognizance for Extension of Limitation, In re) which excluded the period from 15.03.2020 onwards for calculating limitation for all judicial and quasi-judicial proceedings. It noted that the Appellate Authority did not have the benefit of the final Supreme Court order dated 10.01.2022 when it dismissed the appeal.
3. Constitutional Considerations: The Court held that denying the revival of GST registration affects the petitioner's fundamental right to livelihood (Article 21) and the right to carry on business (Article 19(1)(g)). This consideration justifies the exercise of extraordinary writ jurisdiction.
4. Justification for Writ Jurisdiction: The Court entertained the writ petition despite an alternative remedy (appeal) being time-barred, on two primary grounds:
   • The GST Appellate Tribunal, the next forum of appeal under Section 112, has not yet been constituted even after five years of the GST rollout.
   • To prevent grave injustice and uphold the rule of law.
5. Consistency with other High Courts: The Court aligned its reasoning with similar judgments from the Madras, Gujarat, and Punjab & Haryana High Courts, which had taken a similar lenient and pragmatic view in identical fact scenarios, emphasizing the need for a consistent interpretation of a central statute.

6. Statutory References

• Constitution of India: Articles 14, 19(1)(g), 21, 226, and 227.
• Central Goods and Services Tax (CGST) Act, 2017:
  • Section 29(2)(c): Cancellation of registration for non-filing of returns for six continuous months.
  • Section 30: Revocation of cancellation of registration.
  • Section 47: Levy of late fee.
  • Section 107: Appeals to Appellate Authority.
  • Section 109: Constitution of GST Appellate Tribunal.
  • Section 112: Appeals to Appellate Tribunal.
  • Section 128: Power to waive penalty or fee.
  • Section 168A: Power of Government to extend time limits in special circumstances (like pandemics).
• Central Goods and Services Tax (CGST) Rules, 2017:
  • Rule 22: Procedure for cancellation of registration.
  • Rule 23: Procedure for revocation of cancellation of registration.

7. Precedents Cited

• Key High Court Judgments (for similar relief):
  • Tvl. Suguna Cutpiece Center vs. The Appellate Authority (Madras High Court)
  • Aarcity Builders Private Limited vs. Union of India (Punjab & Haryana High Court)
  • Tahura Enterprise vs. Union of India (Gujarat High Court)
  • Aggarwal Dyeing and Printing Works vs. State of Gujarat (Gujarat High Court)
  • Nirmani Engineers and Constructions Pvt. Ltd. vs. The Commissioner of CT&GST (Orissa High Court)
• Supreme Court Judgments (on limitation and jurisdiction):
  • Cognizance for Extension of Limitation, In re (Series of suo motu orders extending limitation during COVID-19).
  • Prakash Corporates vs. Dee Vee Projects Ltd. (Interpreting the effect of the Supreme Court's COVID-19 limitation extension orders).
  • Mohamed Ali vs. V. Jaya (On non-interference under Article 227 when a statutory remedy is available).
  • Mafatlal Industries Ltd. vs. Union of India (On the scope of writ jurisdiction vis-à-vis statutory provisions).