GST Update No 229 on maintainability of writ in case where alternate remedy is available

It is observed that the cases of cancellation of GST registration for not filing GST returns for continuous period of 6 months have increased manifold but getting the same registration restored appears to be a herculean task by the assessee. The emergence of pandemic situation had worsened the situation as many assessees could not file their GST returns due to financial crisis. Recently, one case was reported before Uttarakhand High Court in the case of VINOD KUMAR V/S COMMISSIONER UTTARAKHAND [SPECIAL APPEAL NO. 123 OF 2022] wherein the assessee could not prefer appeal against the order of cancellation of their GST registration within the stipulated time limit due to which their GST registration was not being restored. Consequently, writ petition was preferred which was contested on the grounds of availability of alternate remedy. The decision imparted in this case is subject matter of discussion of our present update.

The petitioner is a working mason/painting professional and was allotted GST registration. However, he failed to file his return for a continuous period of 6 months and consequently, his registration was cancelled on 21.09.2019. Further, appeal preferred was also dismissed as being time barred and hence, this writ petition is filed. The benefit of suo moto extension order passed by the Supreme Court was not given to the petitioner by the Single judge on the grounds that the limitation period expired much prior to the outbreak of pandemic situation in the country. Thereafter, the Counsel of petitioner approached double bench and submitted that it is up to High Court’s discretion to entertain a petition even if alternate course of remedy is available with the assessee. Reliance in this respect was placed on the decision of Apex Court in the case of WHIRLPOOL CORPORATION V/S REGULAR OF TRADE MARKS wherein it was delivered that High Court can entertain an appeal if it results into violation of fundamental rights of the taxpayer, or when vires of an Act is challenged, or where there has been violation of the principles of natural justice or where proceedings are wholly without jurisdiction. It was contended that since cancellation of GST registration in the present case adversely effects the livelihood of the petitioner, merely because there was failure to file appeal within stipulated time period would render the petitioner remediless which is against the Article 21 of the Constitution of India. Reference was further drawn to decision of Gujarat High Court in the case of M/S PANOLI INTERMEDIATE (INDIA) PVT. LTD. V/S UNION OF INDIA AND OTHERS.

The respondent was of view that since alternate remedy is available, present petition should not be entertained.

The Court held that notice which was given to petitioner in this respect on common portal should be delivered personally as well before cancellation of registration. Further, it was stated that the legislature does not provide an unlimited jurisdiction on first appellate authority which consequently, results into hardships for the taxpayers since no remedy is left. Looking into the present scenario, if the GST registration is cancelled, it will result into denial of right to livelihood which consequently results into violation of Article 21 of the Constitution of India. Taking into account all these circumstances, it was held that the present writ stands maintainable. Further, it was also held that the petitioner could not have filed appeal under section 107 of the CGST Act, 2017 as the appeal can be filed only against the order passed by the adjudicating authority. Hence, the question as to whether the Assistant Commissioner is Adjudicating Authority or not was also answered. After placing reliance on decision of Apex Court in the case of RADHA KRISHNA INDUSTRIES V/S STATE OF HIMACHAL PRADESH AND OTHERS and quoting the provisions of Section 107 of UGST Act, 2017, it was stated that the commissioner is not an adjudicating authority and so the Assistant Commissioner is also not to be treated as adjudicating authority in case of cancellation of GST registration. Hence, no appeal lies against the orders passed by him under Section 107 of CGST Act, 2017. Therefore, the matter was remanded back to learned Single Judge for consideration on merits holding that writ petition is maintainable.

The above decision is a remarkable one as it seeks to provide the benefit of considering the issue regarding restoration of GST registration pursuant to cancellation order for which the time period for filing appeal was expired with no possibility of extension even by applying the suo moto extension order of the Apex Court. The benefit of considering the case on merits was granted by exercising the discretionary power of the High Court due to the fact that there was violation of the fundamental right of the petitioner to earn livelihood on account of cancellation of GST registration under Article 21 of the Constitution of India. This decision will be of help to many similar assessees who could not get their registration restored due to not taking any action within the stipulated time period.

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GST Update No 229 on maintainability of writ in case where alternate remedy is available

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