GST update on cancellation of GST registration for non-payment of instalment161/2020-21

The section 29(2)(c) of the CGST Act, 2017 provides for cancellation of GST registration if the registered person has not furnished returns for a continuous period of 6 months. However, the question arises is whether GST registration can be cancelled for non payment of GST instalments within the stipulated period? This issue was recently raised before the Hon’ble Kerala High Court in the case of M/S MAGNAMIND VENTURES (P) LTD. VERSUS THE STATE OF KERALA which is the subject matter of discussion of our present update.
The appellant is an engaged in carrying specialist service of dry cleaning, providing such services to hotels, airline companies. The appellant had been delaying payment of GST from year 2017 onwards. On the basis of Show Cause Notice issued by the department, the appellant agreed to pay off the entire overdue amounts in 12 equal monthly instalments of Rs.9 lacs each. The request was made by the appellant dated 25.02.2020 but there has been no deposit made till date. Consequently, the department cancelled the registration. The learned Single Judge refused to exercise discretion since the petitioner could pay the entire defaulted amounts and revive the registration.
The appellant submitted that they are willing to pay instalments but their registration was cancelled and so they were unable to make online payment. The appellant also submitted that the extraordinary situation created by the pandemic and the resultant lock down, resulted in the establishment remaining closed in the preceding months.
After considering submissions, the Hon’ble High Court held that the appellant has neither deposited tax nor has even offered to deposit a specific amount within a specified period and so no interference can be made to the judgment of the learned Single Judge. However, it was brought to the notice of the High Court that the GST Council has made some recommendations for extension of period for seeking revocation of cancellation of registration. However, since no notification was issued by the Government on the date of pronouncement of order, the High Court held that if a notification is brought out and the appellant are entitled to claim the benefit under that notification, they can do so despite the dismissal of the writ appeal.
The assesseee was expecting relief under this critical situation arisen due to COVID-19 situation but High Court clearly held that the relief will be provided as per notification to be issued by the Government. Even the earlier decision of High Court provided the instalments in payment of tax but no such offer has been made by taxpayer in this case, hence the same was also not provided.

This is solely for educational purpose.

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GST update on cancellation of GST registration for non-payment of instalment161/2020-21

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