From 1st January 2021, taxpayers who fail to file the GSTR-1 and GSTR-3B for two consecutive months will get their GST registration canceled.
Additionally, if you had missed the due date for filing of GSTR1, according to Section 37(4) of the Central Goods and Services Tax Act, a taxpayer shall not be allowed to file GSTR-1 if a previous GSTR-1 is not filed and as per Section 39(10) a taxpayer shall not be allowed to file GSTR-3B if GSTR-1 for the same tax period is not filed.
Several genuine cases of not being able to file the said returns have been granted a second chance to file the returns and get their registrations restored after various judgements of the High Courts.
Transitional Credit Filings
In the case of FILCO TRADE CENTRE PVT. LTD vs UNION OF INDIA – 2022 TAXSCAN (SC) 167 The Supreme Court, had granted an extension of one-month time to the re-opening of the GST portal for filing of transitional credit. In July, the Supreme Court directed to open the GST system enabling the taxpayers to claim transitional credit for two months starting from 1st September to 31st October.
The CBIC and the Tamilnadu GST Department had issued many circulars in regard to clarifying this matter.
Tamil Nadu had issued instructions regarding assessment & cancellation of registration for non-filing of GST Returns.
The guidelines for filing/revising TRAN-1/TRAN-2 were issued earlier pursuant to orders dated 22/07/2022 and 02/09/2022 of the Supreme Court of India in the case of FILCO TRADE CENTRE PVT. LTD vs UNION OF INDIA.
The guidelines for verification of GST TRAN-1 and GST TRAN-2 were issued by the Tamilnadu Government subsequently.
On 14th December 2022, the The Central Board of Indirect Taxes and Customs (CBIC) has further extended the due date for furnishing FORM GSTR1 for November 2022 for registered persons whose principal place of business is in certain districts of Tamil Nadu.
Revocation of Cancellation
When the registration has been canceled by the proper officer, on its own motion and not on the basis of an application by the registered person, then the registered person, whose registration has been canceled, can submit an application for revocation of cancellation of registration, in FORM GST REG-21, to the Proper Officer, within a period of thirty days from the date of the service of the order of cancellation of registration at the common portal, either directly or through a Facilitation Centre notified by the Commissioner.
The period of thirty days can be extended by-
• by the Additional Commissioner or the Joint Commissioner, as the case may be, for a period not exceeding thirty days;
• by the Commissioner, for a further period not exceeding thirty days, beyond the period specified in above.
However, if the registration has been canceled for failure to furnish returns, application for revocation shall be filed, only after such returns are furnished and any amount due as tax, in terms of such returns, has been paid along with any amount payable towards interest, penalty and late fee in respect of the said returns.
On examination of the application if the Proper Officer is satisfied, for reasons to be recorded in writing, that there are sufficient grounds for revocation of cancellation of registration, then he shall revoke the cancellation of registration by an order in FORM GST REG-22 within a period of thirty days from the date of the receipt of the application and communicate the same to the applicant.
However, if on examination of the application for revocation, if the Proper Officer is not satisfied then he will issue a notice in FORM GST REG–23 requiring the applicant to show cause as to why the application submitted for revocation should not be rejected and the applicant has to furnish the reply within a period of seven working days from the date of the service of the notice in FORM GST REG-24.
Upon receipt of the information or clarification in FORM GST REG24, the Proper Officer shall dispose of the application within a period of thirty days from the date of the receipt of such information or clarification from the applicant. In case the information or clarification provided is satisfactory, the Proper Officer shall dispose of the application as above.
In case it is not satisfactory, the applicant will be mandatorily given an opportunity of being heard, after which the Proper Officer after recording the reasons in writing may by an order in FORM GST REG – A 05, reject the application for revocation of cancellation of registration and communicate the same to the applicant.
On 7th December, in a major relief to the taxpayers, the GST portal had introduced a new facility to drop the proceedings for suspension of registration at the GST portal and revoke the suspension of registration.
However, the GST Portal removed its new tweet informing the taxpayers about the new facility to drop the proceedings for suspension of registration at the GST portal and revoke the suspension of registration, has now created confusion among the taxpayers and the tax professionals.
The move could reduce litigation pending before the High Courts. However, the deletion of the post without any clarification from the side of GSTN or the Government implied that the taxpayers have to wait some more time to resolve the issues.
Judicial Decisions on Cancellation of GST Registration on non-filing of returns
In Aarcity Builders Private Limited vs Union of India and others – 2021 TAXSCAN (HC) 102, the Punjab and Haryana High Court had allowed filing of application for revocation of cancellation of registration where GST registration was canceled due to non-furnishing of returns.
In Tvl. Suguna Cutpiece Center vs Appellate Deputy – 2022 TAXSCAN (HC) 1043, the Madras High Court directed the GST department to restore such registrations in order to avoid problems to the taxpayers and the loss of revenue to the department.
In M/s.Raj Kishore Engineering Construction (P) Ltd vs The Joint Commissioner (Appeals) II – 2022 TAXSCAN (HC) 1006, a Single Bench of the Madras High Court had recently set aside the order canceling the GST Registration of the petitioner-Raj Kishore Engineering Construction Pvt Ltd in the absence of a Goods and Services Tax Appellate Tribunal. The matter was subsequently reversed to the First Appellate Authority.
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