Is restoration of suo moto Cancellation of Registration possible under GST?

Introduction:-

To carry on supply or any other GST compliances the first and basic step is the registration. While one may discover the enlistment procedure pointless and muddled, it is trailed by various favorable circumstances, for example, lawful acknowledgment as provider of merchandise/administrations, availment of ITC, legitimate authorisation to gather charge from clients and so forth.

2 scenarios where cancellation of registration can takes place:-

1. Taxable person no more requires the registration and wants to voluntarily cancel it
2. When the proper officer considers the registration liable for cancellation in view of certain specified defaults: –
• registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed
• a person paying tax under composition scheme has not furnished returns for 3 consecutive tax periods
• a person, (other than a person under composition levy), has not furnished returns for a continuous 6 months
• any person who has taken voluntary registration under of section 25(3) has not commenced business within 6 months from the date of registration
• registration has been obtained by means of fraud, wilful misstatement or suppression of facts

At the point when the enlistment has been dropped by the Proper Officer on his own movement and not based on an application by the enrolled individual, at that point the enrolled individual, whose enrollment has been dropped, can present an application for disavowal of wiping out of enrollment. Application for repudiation is to be documented to the Proper Officer, inside a time of 30 days from the date of request of undoing of enlistment.

Can application of revocation of registration be filed when application of cancellation of registration was sent in by mistake?

A similar situation arose in the case of M/s Mahadev Traders vs. Union of India where writ petition was filed seeking a direction to the respondents to restore the registration certificate of the petitioner in accordance with the order dated 15th June, 2020 passed by the Appellate Authority as well as to permit the petitioner to file all its pending returns without any interest or late fees.

Facts of the case:-

1. The Tax Consultant of the petitioner inadvertently applied on 6th November, 2018 for cancellation of registration of the petitioner instead of another firm M/s Mahakal Traders of which the petitioner’s wife is the proprietor.
2. As the petitioner was not able to withdraw the application for cancellation of registration certificate on the common portal, it wrote a letter dated 19th February, 2019 to the Proper Officer for withdrawal of application for cancellation of registration.
3. However, after a lapse of more than a year, the petitioner’s registration certificate was cancelled during lock-down vide ex parte order dated 8th April, 2020 with retrospective effect from 6th November, 2018.

Appeal to the Appellate Authority

Upon an appeal being filed by the petitioner, the Appellate Authority vide order dated 15th June, 2020 set aside the cancellation of petitioner’s registration and allowed its restoration.

Cancelled Registration not restored by Proper Officer

However, on 1st July, 2020 petitioner received a letter from the Proper Officer stating that it is not possible to revoke or restore the petitioner’s registration as the common portal does not permit the Proper Officer to do so.

Submission by petitioner

1. Counsel for the petitioner stated that till date the petitioner had been filing its returns and paying its taxes.
2. If the registration certificate of the petitioner is cancelled w.e.f. 06th November, 2018, all the buyers who have made purchases from the petitioner would be denied the use of input tax credit leading to a lot of chaos and confusion.

Appeal to High Court

1. Aggrieved with the stand of the GSTIN and Proper Officer, the taxpayer appealed before the High Court
2. Respondent stated that respondent did not wish to challenge the order of the Appellate Authority in petitioner’ favour.
3. He admitted that the petitioner had an authentic case.
4. GSTIN stated that the functionality of restoration is at the stage of ‘User Acceptance/Testing’ and will be incorporated on the common portal within fifteen days.
5. Consequently, after fifteen days, respondents would be in a position to restore the petitioner’s registration.

Hence a new functionality for restoration of cancelled registration certificate will soon be added to the common portal in effect of the order passed by the Delhi High Court.