The present writ appeal is arising out of the order dated 17.2.2021 passed by the learned Single Judge in W.P.No.2803/2021 (Aditya Auto Engineering Pvt.Ltd., vs. Union of India and Others).

2. The facts of the case reveal that respondent No.1 – company is engaged in the business and sale of tippers, trailers, load bodies, bulkers and garbage compactors. It was registered under the provisions of the Central and Karnataka Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act and KGST Act) and admittedly failed to file its returns prescribed under the GST law in Form GSTR 3-B and discharge its liability for the period from September 2018 till date. The assessment orders were passed from time to time under Section 62 of the CGST Act quantifying the tax liability of respondent No.1 and directing it to file its returns and discharge the arrears.

3. The facts further reveal that respondent No.1 did not file its returns and discharged its tax liability. Instead, it challenged one such order passed under Section 62 of the CGST Act for the period w.e.f., September 2018 to August 2019 in first appeal and the same was dismissed on the ground that statutory pre-deposit was not made by respondent No.1 as provided under Section 107 of the CGST Act.

4. Thereafter, respondent No.1 preferred a writ petition i.e., W.P.No.52967/2019 challenging the assessment order passed under Section 62 of the CGST Act and the same is pending. Respondent No.1 has thereafter filed another writ petition i.e., present writ petition challenging the assessment order passed for the period w.e.f., September 2019 to October 2020.

5. Another important aspect of the case is that respondent No.1 has failed to file its returns for a continuous period of 6 months, hence, after following due process of law, the registration under the GST law was cancelled by an order dated 19.10.2020 and the same is also a subject matter of the present writ petition/writ appeal.

6. The record of the case reveals that the appellants/ authorities under the CGST Act have issued GSTR-3A notice on number of occasions under Section 46 of the CGST Act for non- filing of the returns in GSTR 3B for the period w.e.f., October 2018 to October 2020 (continuous 25 months) and in the said GSTR-3A notice, it was made clear to file returns within 15 days, failing which the tax liability will be assessed under Section 62 of CGST Act. Respondent No.1 neither replied to the notices nor has filed GSTR returns.

7. Another important aspect of the case is that respondent No.1 was filing GSTR-1 regularly till September 2020 and passing the ITC to its customers and subsequently, another notice REG-17 under Section 29(2) and under Rule 22(1) of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as CGST Rules) was issued for cancellation of the registration on account of the non-filing of the returns GSTR-3B and again to said notice also, no reply was filed nor respondent No.1 appeared in person as scheduled in REG-17. Finally, the registration has been cancelled w.e.f., 1.1.2020.

8. Another important aspect of the case is that respondent No.1 has declared its tax liabilities in monthly returns GSTR-1, but not discharged its tax liabilities in GSTR-3B for the period from October 2018 to October 2020. Hence, in view of the provisions of Section 62 r/w Sections 39, 47, 50 and 122 of the CGST Act, orders ASMT-13 were issued till October 2020 and the tax liability claimed is ₹ 16,83,45,476/-, interest as applicable and penalty to the tune of ₹ 1,70,71,385/-.

9. A writ petition was preferred for quashment of the order of cancellation of registration and the various orders passed by the authorities from time to time in respect of assessment for the periods w.e.f., September 2019 to October 2020 and the following prayers were made before the learned Single Judge;

“a) Issue a writ of certiorari or any other appropriate Writ, Order or direction, in the nature of Writ, quashing the Order for Cancellation of Registration passed on 19.10.2020 by Respondent No.3 enclosed at Annexure–A as passed under unconstitutional provision and violative of principles of natural justice;

(b) Issue a writ of certiorari or any other appropriate Writ, Order or direction, in the nature of Writ, quashing the impugned assessment orders issued for the period September to October, 2019 dated 18.12.2019; November, 2019 dated 21.01.2020; December, 2019 dated 21.01.2020 and January to October, 2020 dated17.12.2020 dated 17,12.2020 enclosed as Annexure B to Annexure E to the Writ Petition, passed by the Respondent No.4 as arbitrary, illegal, issued in violation of principles of natural justice and in contrary to the Circular No. 129/48/2019-GST, dated 24-12-2019;

(c) Issue a Writ of Mandamus or any other appropriate Writ, Order or direction, in the nature of Writ, allowing the Petitioner to file the GSTR-3B returns manually, avail credit eligible to them under Section 16, without insisting on payment of cash portion of the tax liability, as already prayed in Writ Petition No.52967/2019 (T-Res);

(d) Issue a writ of certiorari or any other appropriate Writ, Order or direction, in the nature of Writ, directing Respondent No. 5 to allow the Petitioner to pay the tax dues in instalments as per Section 80 of the CGST Act, 2017 as already prayed in Writ Petition No.52967/2019 (T-Res) and,

(e) Pass such other order or orders as the Hon’ble Court may deem fit and proper in the circumstances of the case, and in the interests of justice.

INTERIM PRAYER

That for the reasons stated in the Writ Petition, it is further prayed that this Hon’ble Court may be pleased to revoke the order canceling registration of the Petitioner issued by Respondent No.3 and stay the operation of the Assessment Orders issued by Respondent No.4, pending disposal of this Writ Petition and thus render justice.”

10. The learned Single Judge has granted an interim order on 17.2.2021 staying the operation of cancellation of registration dated 19.10.2020, permitting respondent No.1 to file manual returns for the backlog period and reserving liberty to the revenue to consider the request of respondent No.1 for permission to pay the arrears of tax and installments.

11. The order dated 17.2.2021 passed by the learned Single Judge reads as under;

“The petitioner has sought for issuance of appropriate writ to quash the order of cancellation of registration passed on 19.10.2020 by respondent No.2. The petitioner has also sought for issuance of an appropriate writ to quash the assessment orders for the period September 2019 to October 2019 dated 18.12.2019, November 2019 dated 21.01.2020, December 2019 dated 21.01.2020 and January to October 2020 dated 17.12.2020.

2. The petitioner has also sought for a specific direction to the respondent to permit the petitioner to file GSTR-3B manually while enabling credit without insisting for cash portion of tax liability in light of the order passed in W.P.No.52967/2019 (T-Res).

3. The petitioner has further sought for a direction in the nature of appropriate writ to respondent No.5 to consider his request for rescheduling the payment of tax in equal installments as per Section 80 of the CGST Act, 2017.

4. The learned Senior Counsel appearing for the petitioner would submit that the order of cancellation of registration passed on 19.10.2020/05.10.2020 is in violation of principles of natural justice and is erroneous, as the petitioner has not submitted any reply nor was there any hearing before passing of the order of cancellation.

5. It is specifically asserted that the reference to ‘examined your reply and submissions made at the time of hearing’ in the impugned order is contrary to the actual facts. Hence, it is submitted that the order passed being in violation of principles of natural justice, which has resulted in business coming to a stand still and ought to be stayed.

6. The learned Senior Counsel also submits that the petitioner has made its position clear that they are willing to pay the arrears of tax in terms of installments that would be afforded to them in terms of Section 80 of CGST Act and if that were to be so, no prejudice would be caused to the Revenue.

7. It is further submitted that, as the petitioner is not able to carry on its business, the adverse impact of cancellation of registration is to be taken note of.

8. The contentions are also advanced as regards merits of the order pointing out that the existing procedure whereby the assessee cannot file his return if cash component is not paid, is illegal and contrary to law.

9. Subject to further consideration and taking note of orders passed by High Court of Kerala at Ernakulam in W.P.No.21490/2020 (I) dated 12.10.2020 and also the order of High Court of Gujarat at Ahmedabad in R/Special Civil Application No.5873/2019 dated 18.04.2019 as well as the order passed by High Court of Gujarat, Ahmedabad in R/Special Civil Application No.13794/2020, there would be an interim order of stay of the order of cancellation of registration at Annexure-A dated 05.10.2020.

10. In the interregnum, during the pendency of the proceedings, subject to further orders, the petitioner is permitted to file the rescheduled returns manually. The respondents are at liberty to consider the submission made on behalf of the petitioner that they are agreeable for re-scheduling of payment of tax in terms of Section 80 of CGST Act in 24 equal installments.

11. Learned counsel for the respondents seeks time to file the statement of objections and also to respond to the undertaking made on behalf of petitioner as regards the payment of tax arrears in equal installments in terms of Section 80 of CGST Act.

List the matter in ‘orders’ category on 24.02.2021.”

12. This Court has carefully gone through the interim order passed by the learned Single Judge. The GST laws do not permit for filing of manual returns. There is no facility under the law to accept manual returns and by allowing respondent No.1 to file returns manually will certainly unsettle the entire scheme of GST and therefore, on this ground alone, the interim order passed by the learned Single Judge deserves to be set aside.

13. In the instant case, the registration of respondent No.1 is not in existence. The registration was cancelled for non-filing of its returns for a continuous period of more than two years and by granting an interim order, respondent No.1 has been permitted to continue its business as a registered dealer even though the law prescribes that a person, who does not file returns for a continuous period of 6 months, is liable to be deregistered.

14. Respondent No.1 himself has admitted in the writ petition that it has not filed returns in form GSTRN-3B since 2018 and therefore, in the considered opinion of this Court, the interim order passed by the learned Single Judge deserves to bet aside and the matter in fact deserves to be heard finally on merits.

15. In the present case, the total outstanding liability as reflected from the record prima facie appears to be ₹ 16,83,45,476/- (tax amount) plus interest as applicable and penalty of ₹ 1,70,71,385/- and therefore, unless and until its liability is satisfied, such an interim order should not have been granted in the peculiar facts and circumstances of the case.

16. Resultantly, after hearing the learned counsel for the parties, this Court is of the considered opinion that the impugned interim order passed by the learned Single Judge dated 17.2.2021 deserves to be set aside and accordingly, it is set aside. However, the learned Single Judge is requested to decide the matter on merits, as expeditiously as possible. It is needless to mention that the learned Single Judge shall be free to decide the matter on merits in accordance with law without being influenced by the order passed by this Court or without being influenced by the interim order passed on 17.2.2021.

Writ appeal stands allowed accordingly.

Pending IA stands disposed of.