In WP(C) No. 24904 of 2023 -KER HC- Kerala High Court rules that payment of GST & interest does not prevent cancellation of GST registration for failure to file returns
Justice Dinesh Kumar Singh [14-9-2023]

Read Order: M/s. Sanscorp India Private Ltd V. The Assistant Commissioner & Ors.

Chahat Varma

New Delhi, October 5, 2023: In a recent development, the Kerala High Court has dismissed a writ petition filed by M/s. Sanscorp India Private Ltd. (petitioner), challenging the cancellation of their GST registration due to their failure to file returns for a continuous period of six months.

In the case at hand, the petitioner had failed to submit GST returns in Form 3B for the period spanning from April 2022 to December 2022, as mandated by Section 39 of the Goods and Services Tax Act (GST Act). Subsequently, the petitioner received a show-cause notice, instructing them to provide reasons as to why their GST registration should not be cancelled due to their failure to file returns continuously for a six-month period. Additionally, the notice required the petitioner to appear before the relevant authority. Despite receiving the notice, the petitioner neither submitted a response nor filed the required return. Consequently, the petitioner's GST registration was cancelled.

The petitioner contended that if they have paid the GST amount and the associated interest, they should not be considered defaulters for failing to file the return. Consequently, the petitioner asserted that the proceedings for the cancellation of their registration should be rendered non est and that the order cancelling their registration should be restored.

The single-judge bench of Justice Dinesh Kumar Singh highlighted that the provisions governing the cancellation of registration and the requirement to make payment of tax with interest are distinct and serve different purposes. When an assessee fails to remit the full GST amount or a portion thereof, interest becomes applicable as a penalty for the delayed payment. Conversely, if an assessee neglects to file returns continuously for a period of six months, their registration becomes subject to cancellation. There is no contradiction in the provisions of Section 50 or Section 29 of the GST Act.

The bench stated that it was undisputed fact that the petitioner had failed to submit returns for a continuous period of six months. Consequently, the authority had no alternative but to cancel the petitioner's registration.

The bench further noted that while the petitioner argued that the GST software does not align with the provisions of the Act and its accompanying rules, this contention must be dismissed. It was pointed out that since the entire country utilizes the same software to file returns and pay taxes successfully, it cannot be claimed that the GST portal was not viable.

Accordingly, the present writ petition was dismissed.