GST Department Can't Challenge Registration Restoration Orders After Implementing Them: GSTAT Hyderabad

The Goods and Services Tax Appellate Tribunal (GSTAT) at Hyderabad, on 18 September held that the GST Department cannot challenge orders restoring GST registrations after acting upon those orders and restoring the registrations.

A Two-Member Bench comprising Judicial Member A P Ravi and Technical Member Duvvuri Krishna Srinivas disposed of 16 Department appeals as not maintainable, holding that they had become infructuous after the registrations were restored. The Tribunal observed:

“Having implemented the impugned orders by restoring the Respondents' registrations, the Department cannot, in the circumstances of the present case, assail the very orders upon which it has already acted.”

Taxpayers had failed to furnish GSTR-3B returns continuously for six months, following which the Department cancelled their registrations. They subsequently filed delayed appeals before the First Appellate Authority (FAA). The FAA condoned the delays, relying on decisions of the Telangana High Court, and allowed the appeals subject to payment of outstanding tax dues.

The Department then implemented the FAA's orders and restored the registrations after verifying the payments made by the taxpayers. The taxpayers resumed their business operations and the registrations remained active.

The Tribunal held that the FAA had exceeded the statutory limit under Section 107(4) of the CGST Act by condoning delays beyond the additional one-month period permitted under the provision. It also held that the FAA could not rely on orders passed by the Telangana High Court under Article 226 to enlarge its statutory jurisdiction.

However, the Bench held that the Department, having implemented the FAA's orders, could not subsequently challenge those very orders.

It also rejected the Department's objection based on Rule 23, holding that failure to pursue revocation of the cancelled registrations did not extinguish the taxpayers' independent appellate remedy under Section 107.

Accordingly, the GSTAT disposed of the appeals as not maintainable, with no order as to costs.