Whether application for revocation of cancellation of registration can be rejected even if all the defaulted returns are furnished?

PJ/Case Study/2020-21/161

01 August 2020

M/s DNR Technologies (OIA No. 77(DSD)CGST/JDR/2020 dated 21.07.2020

Issue involved: Whether application for revocation of cancellation of registration can be rejected even if all the defaulted returns are furnished?

Brief Facts: M/s DNR Technologies registration has been cancelled by the jurisdictional officer by exercising powers contained in section 29(2)(c) of the CGST Act, 2017. A show cause notice was issued to the appellant alleging that their registration is liable to be cancelled as they have not filed returns for the continuous period of six months. An application for revocation of cancellation of registration was filed by the appellant. However such application was also rejected ex parte by the officers.

Applicant’s Contention:The assesse has contended in the following manner

The appellant submit that due to pandemic situation prevailing in the country, they were unable to attend personal hearing for the revocation application filed by them. In this regard, they wish to place reliance on the provisions contained in the Notification No. 35/2020-Central Tax dated 03.04.2020 wherein it was stated that in view of the spread of pandemic COVID-19 across many countries of the world including India, the government, on the recommendations of the Council, notified that-

where, any time limit for completion or compliance of any action, by any authority or by any person, has been specified in, or prescribed or notified under the said Act, which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020,and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action, shall be extended upto the 30th day of June, 2020, including for the purposes of-
(a) completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the Acts stated above; or
The appellant submits that as provisions regarding revocation of cancellation of registration are contained in section 30 of the CGST Act, 2017, and this section is not mentioned in the above cited list of exceptions, the extension is applicable in the present case. Consequently, the learned adjudicating authority could not have rejected their application for revocation of cancellation of registration ex-parte, in exceptional circumstances that were prevailing in the country. Therefore, the impugned order rejecting the revocation application is not at all tenable and deserves to be set aside.

The appellant further submits that passing of order without providing sufficient opportunity to the assessee in order to defend himself is against the basic principles of natural justice. It is pertinent to mention that even proviso to section 75(5) of the CGST Act, 2017 states adjournment shall be granted for three times to a person during the proceedings. Similar proviso is contained in section 107(9) pertaining to appeals to appellate authority and proviso contained in section 113(2) pertaining to orders of appellate tribunal in the CGST Act, 2017. Therefore, in exceptional circumstances as that of pandemic, the learned adjudicating authority ought to have granted adjournment of personal hearing in the prevalent lockdown situation in the country. However, on the contrary, ex-parte order has been passed against the appellant who is not at all tenable and deserves to be set aside.

In this regard, reliance is placed on the following judicial pronouncements that have held that at least three opportunities of personal hearing should be granted to the assessees:-

IMTIYAZ AHMED VERSUSCOMMISSIONER OF CUSTOMS, MANGALORE [2014 (308) E.L.T. 625 (Tri. - Bang.)] :-
V. SATHYAMOORTHY & CO. VERSUS CESTAT, CHENNAI [2015 (39) S.T.R. 24 (Mad.)]:-
The appellant have already explained their genuine reason for not attending the personal hearing granted to them during the lockdown situation in the country. Consequently, the act of learned adjudicating authority in not providing them further opportunity of personal hearing and rather, deciding the case ex-parte is violation of the principles of natural justice as the appellant was not given effective opportunity to defend their case. It has been held by the highest Court of India that the order passed without giving personal hearing is not justified. It has been held in the Supreme Court of India in the case of UMA NATH PANDEY VERSUS STATE OF U.P. [2009 (237) E.L.T. 241 (S.C.)]that the hearing is the essence of any decision and an order passed without being heard is void ab initio. As such, order passed without giving personal hearing is void ab initio. Similar decision is given in the following cases:-
- ANDHRA AGENCIES VS STATE OF AP [2008-TIOL-228-SC-CT]:-
- M/S MEASUREMENT & CONTROLS INDIA LTD VS CCE, PONDICHERRY [2008-TIOL-1538-CESTAT-MAD]:-
The appellant further submit that after communicating with the concerned adjudicating officer, it was stated that even after filing of returns by the appellant, there was no option available with the concerned officer on the GST portal to revoke the cancellation of registration. The only option available with the officer was to reject their application for revocation of cancellation of registration which is definitely a technical lapse on the GST portal. The appellant cannot be asked to suffer because of any technical glitch on the GST portal. In this regard, the appellant wish to place reliance on the recent landmark judgment rendered by the Hon’ble Delhi High Court in the case of BRAND EQUITY TREATIES LIMITED pronounced on 05.05.2020 wherein it was held that substantial benefit of transitional credit cannot be denied for procedural lapse in not filing the TRAN-1 within the stipulated period, particularly when the GST portal had various technical issues prevalent. The Hon’ble High Court allowed the assessees to file TRAN-1 upto 30.06.2020 (either online or manual) by placing reliance on the provisions contained in Limitation Act. This indicates that the substantial benefit cannot be withheld for technical problems on the GST portal. Similarly, the appellant wish to place reliance on various decisions that have held that substantial benefit should not be denied for procedural or technical lapses:-

GLOBAL SUGAR LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR [2016 (334) E.L.T. 604 (ALL.)]:-
COMMISSIONER OF C. EX., ALLAHABAD VERSUS HINDALCO INDUSTRIES LTD. [2013 (293) E.L.T. 208 (ALL.)]:-

IN RE : ACE HYGIENE PRODUCTS PVT. LTD. [2012 (276) E.L.T. 131 (G.O.I.)]:-

IN RE : BANARAS BEADS LTD. [2011 (272) E.L.T. 433 (G.O.I.)]:-

COMMISSIONER OF C. EX., SURAT VERSUS UNIFLEX CABLE LTD. [2007 (212) E.L.T. 393 (TRI. – MUMBAI)]:-

TATA MOTORS LTD. VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [2006 (197) E.L.T. 223 (TRI. – KOLKATA)]:-

Reasoning of judgement

Commissioner Appeals before concluding the case has referred to Rule 23 of CGST Rules of CGST Rules 2017 wherein the time period for submission of application of revocation of the cancellation of registration is being specified i.e. 30 days from the date of service of the order of cancellation of registration. Further a proviso has been mentioned where the cancellation of registration has been done on the basis of failure to file returns then application for revocation can be filed only after the returns are furnished and any amount pending is paid. It has been held that the appellant has correctly done so.

Reference has also been made to Order No. 1/2020-CT dated 25.06.2020 where due to the COVID 19 pandemic the calculation of 30 days for filing the application for revocation has been extended. It has been held that the appellant has correctly done so.

Moreover, it was found that all the defaulted returns have been filed by the appellant who is in accordance to the proviso to Rule 23(1).

Decision: The appeal has been passed in favour of the appellant and the order of the adjudicating authority has been set aside.

Conclusion: If the proper officer did not have option to accept the application for revocation of cancellation of registration, manual order could have been passed restoring the registration of the appellant. However, lack of facility on GST portal cannot be grounds to reject the application for revocation of cancellation of registration as procedural or technical infractions/lapses cannot come in way of claiming the substantial benefit. Moreover, Removal of difficulty order no. 01/2020 dated 25.06.2020 has extended the time limit for filing of application for revocation of cancellation of registration for specified taxpayers. The government should work on increasing the competency of portal so that all the benefits should be availed by the taxpayers.

Comments

PJ/Case Study/2020-21/161
01 August 2020

Post a Comment

Query