2021 (11) TMI 438 - HC - GST

Cancellation of registration under GST - minor defect in the sub-let agreement or not - non-existence of the petitioner at the registered place - HELD THAT - In view of the facts and circumstances of the case that it is not a case of tax evasion or causing revenue loss to the Government rather petitioner s activity of carrying on the business which cannot be called illegal is creating revenue for the State as well as in helping the State to solve the problem of unemployment a little bit and such type of drastic action in the facts and circumstances of the case by canceling the registration of the petitioner on such hyper technical ground will not help the State rather it will cause revenue loss to the State as well as aggravate unemployment problem in the State which will be a social problem in the society. The order of the Appellate Authority dated 25th August, 2021 is set aside, confirming the cancellation of registration of the petitioner for revocation of cancellation of its registration, by directing the State respondent concerned to consider afresh - petition disposed off.

Summary

Issues:
Challenge to cancellation of GST registration under Section 29(2) of State GST Act based on technical grounds, existence of business at declared place, rejection of application for revocation of cancellation, consideration of supplementary agreement, impact on revenue loss and unemployment, reliance on previous court decision.

Analysis:
The petitioner contested the cancellation of its GST registration citing a minor defect in the sub-let agreement, rectified by a supplementary agreement. The petitioner argued that conducting business from alternate locations during the pandemic to comply with Covid-19 protocols should not be grounds for cancellation, especially since taxes were paid to the State authorities timely. The petitioner emphasized that the cancellation was not due to tax evasion but rather a technicality, which, if upheld, could lead to revenue loss and worsen unemployment. Reference was made to a previous court decision supporting the petitioner's stance.

The judge, after considering the facts and circumstances, found in favor of the petitioner. The impugned orders canceling the registration and rejecting the revocation application were set aside. The State respondent was directed to re-evaluate the case, taking into account the previous court decision and the observations made in the current judgment. A physical inspection of the premises was ordered, with the petitioner given the opportunity to provide necessary documents and demonstrate actual possession at the registered place. The State respondent was instructed to verify the petitioner's existence and business activities at the premises through local sources, emphasizing a non-hyper technical approach in making a reasoned decision after hearing the petitioner.

In conclusion, the writ petition challenging the cancellation of GST registration was disposed of with the direction for a fresh consideration by the State respondent, ensuring a fair assessment of the petitioner's situation and business operations without solely focusing on technicalities.