GST Update No 337 on restoration of cancelled GST registration

It is commonly observed nowadays that GST registration of the assessees is being cancelled out by the revenue authorities. However, it is well established that this does not frees the assessee from the cage of continuous liabilities existing before the cancellation of registration. Although, cancellation of registration creates a havoc for both the taxpayers and Government leading to loss of Government’s Exchequer and closure of business on the other hand. On similar parameters, one case was reported before Bombay High Court in the case of Euro Pratik Sales Corporation V/s Union of India and Ors. The story line of this decision is subject matter of our present update.

The petitioner seeks for Writ of Mandamus to direct the respondent to allow petitioner to file Tran-2 to enable petitioner to claim credit. The petitioner closed his business and applied for cancellation of registration. In the present case, at the time of cancellation of registration, the petitioner had deemed excise credit of Rs. 39,13,025/- which the petitioner was entitled to claim in TRAN-1. Although, petitioner applied for transition but due to various reasons, nothing happened. The petitioner contended that “how can they apply for revocation of cancellation of registration when the same was not done by the tax official?”.

The Counsel of revenue submitted that the petitioner is registered with the State GST and in the present petition only Central Authorities are the party and not the State authority.

The Court observing the case narrated that the petitioner was unable to transit the credit because of cancellation of GST registration. Further, various provisions of the Act such as revocation of cancellation of registration, continuation of liability even after cancellation of registration were referred to by the Court. It was observed that the revocation of cancellation of registration is not applicable in the present case since the petitioner on his own motion cancelled the registration. However, in the present case, the petitioner cannot be permitted to forgo Rs. 39,13,025/- being deemed excise credit specially when the liability will continue even after cancellation of registration. It would be wholly unfair if the petitioner’s deemed excise credit of substantial amount if foregone. Hence, it was directed to petitioner to submit a physical application for restoration of registration pursuant to order of Apex Court for opening of Tran-1 and Tran-2 migration window. Further, if the same is not resolved by 28.11.2022, the officer shall consider the matter.

The above decision is yet another epitome of the fact that substantial benefits available with the assessee should not be denied merely because of the procedural lapses. The revenue authorities should germinate a lenient approach before invoking any adjudication proceedings failing which increases unnecessary hardships of the taxpayer manifolds. It is high time that these Judicial Pronouncements should be followed at the earliest otherwise the sky will be limit for endless litigations and disputes.

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GST Update No 337 on restoration of cancelled GST registration

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