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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD
Mangesh S. Patil, S.G. Chapalgaonkar, JJ.
Rohit Enterprises – Appellant
Versus
Commissioner State Gst Bhavan & Ors. – Respondents
Writ Petition No. 11833 of 2022
Decided On : 16-02-2023
GST Registration - Cancellation - Article 226 of the Constitution of India - Central Goods and Services Tax Act, 2017 - Maharashtra State Goods and Services Tax Act, 2017 - Section 29(2), Section 107 - Mafatlal Industries Ltd. Vs Union of India (1997) 5 SCC 536
Fact of the Case:
The petitioner, a proprietary firm engaged in fabrication work, had its GST registration cancelled due to failure to file returns, and subsequent appeal was rejected on the ground of limitation. The petitioner approached the High Court under Article 226 of the Constitution of India seeking relief.
Finding of the Court:
The Court found that the petitioner's financial and health challenges during the pandemic, coupled with the stringent provisions of the GST Act, led to the cancellation of registration and dismissal of the appeal on technical grounds. The Court emphasized the constitutional guarantee of the right to carry on trade and profession, and the need to enforce it regardless of shortcomings in the GST enactment.
Issues: The issues involved the cancellation of GST registration, rejection of the appeal on the ground of limitation, and the petitioner's right to carry on business in light of the constitutional guarantees.
Ratio Decidendi: The Court held that the right to carry on trade or profession cannot be curtailed contrary to the constitutional guarantee under Art. 19(1)(g) and Article 21 of the Constitution of India. It also emphasized that the jurisdiction of the High Court under Art. 226 cannot be restricted by the provision of any Act to bar or curtail remedies.
Final Decision: The Court allowed the writ petition, quashed the orders suspending and cancelling GST registration, and declared the petitioner's registration as valid from a specified date, subject to the condition of filing up-to-date GST returns and paying pending dues.
JUDGMENT
S.G. Chapalgaonkar, J. - Rule. Rule is made returnable forthwith. The petition is heard finally, with the consent of the learned counsel for the parties.
2. The petitioner approaches this Court under Article 226 of the Constitution of India with following prayers :-
(C) That the order passed by the State Tax Officer dt. 14.3.2022 of cancellation of registration may kindly be quashed and set aside.
(D) That, the order dt. 28.2.2022 passed by the State Tax Officer suspending the registration w.e.f. 28.2.2022 may kindly be quashed and set aside.
(E) That, the Hon'ble High court may kindly hold that, the petitioner registration no.27AHQPD2485F1Z7 is valid from 28.2.20222 onwards.
3. The petitioner is a proprietary firm engaged in the business of fabrication work. It is registered under the Central Goods and Services Tax Act, 2017 (GST Act) as well as Maharashtra State Goods and Services Tax Act, 2017. The certificate of registration dated 20-07-2018 has been issued to his firm with registration No. 27AHQPD2485F1Z7. Petitioner contends that since he had undergone angioplasty, and the firm suffered financial set back in pandemic situation, GST returns from August 2021 could not be filed. Section 29(2) of the GST Act enables proper officer to cancel registration if registered person / firm fails to furnish three consecutive returns. The State Tax Officer, Aurangabad issued a show cause notice dated 28-02-2022 calling upon the petitioner to furnish his explanation within a period of 7 working days. The notice stipulated that the registration of the petitioner stood suspended. The petitioner replied the show cause notice on 03-03-2022. Citing the reason of the financial crunch, he requested for revocation of the notice. However, the State Tax Officer vide order dated 14-03-2022 cancelled the registration with effect from 21-08-2021.
4. The petitioner requested for revocation of the cancellation of registration. In response, the State Tax Officer issued show cause notice for rejection of the application. The petitioner was called upon to furnish the reply within 7 days along with supporting documents like bank statement till the date of the notice, challan of tax, interest and late filing penalty. The matter was taken up for hearing on 25-04-2022. Finally, the State Tax Officer rejected the application of petitioner seeking revocation of cancellation vide order dated 17-05-2022.
5. The petitioner filed appeal under section 107 of the Maharashtra Goods and Service Tax Act, 2017 challenging cancellation of registration. It was registered as Appeal No. DCST/Appl./E-001/GST-Revocation/2022-2023/B-619. The Dy. Commissioner/State Tax (Appeal), Aurangabad Division rejected the appeal on the ground of limitation that the appeal has been submitted beyond the prescribed period provided under section 107 (1) and 107 (4) of the MGST Act, 2017.
6. Mr Alok Sharma, learned advocate appearing for the petitioner submits that the petitioner is the vendor of the Bajaj Auto Limited and earns his livelihood through fabrication business. Due to pandemic situation, the business activities of the petitioner were hampered causing huge financial loss. The petitioner was also unwell. In August 2021, he underwent angioplasty. Mr Sharma would further submit that petitioner could not submit his GST returns during the relevant period and suffered cancellation of the resignation. He would submit that the petitioner had approached the appellate authority challenging cancellation of the registration. However, his appeal came to be rejected on technical grounds as it was time barred. The appellate authority is not vested with the powers to condone delay of more than 30 days as per section 107 of the GST Act. The petitioner would not be in a position to continue his business in absence of registration and would face starvatio
The central legal point established in the judgment is that the right to carry on trade or profession cannot be curtailed contrary to the constitutional guarantee, and the provisions of the GST enact....
The Court emphasized the right to seek revocation of GST registration cancellation, highlighting the need for fairness in circumstances obstructing compliance due to health issues.
The main legal point established is that the cancellation of GST registration must be preceded by providing a reasonable opportunity to the registered person, and the process must be undertaken in ac....
The court directed the restoration of GST registration subject to the petitioner fulfilling tax obligations, emphasizing compliance with the GST Act.
Reviving GST registrations in certain circumstances serves the interest of the revenue and the GST regime, and adequate safeguards exist to prevent abuse and ensure compliance.
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