In a recent case, the Calcutta High court set aside the order cancelling Goods and Services Tax ( GST ) registration on filing of GST returns. It was found that since, the petitioner in such a case would not be able to carry on his business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of tax.
Mr. Thakur, advocate appeared for the petitioner, Subhashis Mojumder at the very outset submitted that the prayer challenging the order of cancellation of the registration of the petitioner effected on 27th May 2020 though, has not been incorporated, yet the writ petitioner by way of the appeal under Section 107(1) of the GST Act, 2017 (“said Act”) having challenged the self-same order.
A show cause notice was issued calling upon the petitioner as to why the registration of the petitioner under the said Act, shall not be cancelled for the petitioner having failed to file its returns for a continuous period of 6 months. Although, the petitioner had responded to the same, by an order, the proper officer had been pleased to cancel the petitioner’s registration.
Relying on the judgement in the case of Subhakar Golder v. Assistant Commissioner of State Tax, Serampore Charge , it was submitted that in similar circumstances, similar order of cancellation of registration has been set aside, subject to the condition that the petitioner files returns for the entire period of default, pays requisite amount of tax, interest, fine and penalty.
Mr. Banjerjee, advocate appeared for the State on the other hand submits that the petitioner had not complied with the statutory provisions and it is for such reason, the registration of the petitioner under the said Act was cancelled.
The respondent authorities stated that the petitioner was given an opportunity to the show cause. Unfortunately, since the reply to the show cause was unsatisfactory, the registration was cancelled.
The court found that the registration of the petitioner had been cancelled on the ground of non-filing of returns. It is not the case of the respondents that the petitioner had been adopting dubious process to evade tax.
It was found that the suspension/revocation of license would be counterproductive and works against the interest of the revenue since, the petitioner in such a case would not be able to carry on his business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of tax.
A single bench of Justice Raja Basu Chowdhury viewed that the respondents should take a pragmatic view in the matter and permit the petitioner to carry on his business.
The court set aside the order 27th May 2020 cancelling the registration of the petitioner subject to the condition that the petitioner files his returns for the entire period of default and pays requisite amount of tax, interest, fine and penalty.
Further held that if the petitioner complies with the directions / conditions noted above within 4 weeks, the petitioner’s registration under the said Act shall be restored by the Jurisdictional
Officer and as a sequel thereto the order dated 27thMay, 2020 cancelling the petitioner’s registration and the order dated 5th February 2024 passed by the appellate authority under Section 107 of the said Act shall stand set aside.
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