2024 (12) TMI 1435 - HC - GST

Cancellation of registration of the petitioner - non-filing of returns for a continuous period of six months - HELD 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. Taking note of the fact 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, the respondents should take a pragmatic view in the matter and permit the petitioner to carry on his business. It is proposed to set aside the order dated 2nd March, 2023 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 and interest and fine and penalty. Petition disposed off.

2024 (5) TMI 1262 - HC

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the cancellation of the petitioner's registration under the Central/West Bengal Goods and Services Tax Act, 2017 due to non-filing of returns for a continuous period of six months was justified.
Whether the petitioner should be allowed to have the cancellation order set aside and be permitted to file the outstanding returns, pay the requisite taxes, interest, fines, and penalties.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification of Registration Cancellation

Relevant legal framework and precedents: The cancellation was based on the provisions of the Central/West Bengal Goods and Services Tax Act, 2017, which mandates the filing of returns. The precedent cited was the case of Subhakar Golder versus Assistant Commissioner of State Tax, where a similar cancellation was set aside under specific conditions.
Court's interpretation and reasoning: The court noted that the cancellation was due to non-filing of returns, not due to any fraudulent activity or tax evasion by the petitioner. The court emphasized the importance of a pragmatic approach that supports business continuity and tax recovery.
Key evidence and findings: The petitioner admitted to not filing returns but expressed willingness to comply. The respondents confirmed the non-filing but did not allege any fraudulent intent.
Application of law to facts: The court applied the precedent from the Subhakar Golder case, considering the potential negative impact on tax recovery if the petitioner's business operations were halted.
Treatment of competing arguments: The petitioner argued for leniency based on willingness to comply, while the respondents focused on procedural compliance. The court balanced these by setting conditions for reinstatement.
Conclusions: The court concluded that the cancellation should be set aside, provided the petitioner complies with filing returns and paying dues within a specified timeframe.

Issue 2: Conditions for Setting Aside Cancellation

Relevant legal framework and precedents: The court referenced the Subhakar Golder case for setting conditions under which the cancellation could be reversed.
Court's interpretation and reasoning: The court reasoned that allowing the petitioner to rectify the default would facilitate tax recovery and business operations, aligning with the legislative intent of the tax framework.
Key evidence and findings: The court found no evidence of tax evasion, only procedural non-compliance, which the petitioner was willing to rectify.
Application of law to facts: The court applied the precedent by allowing the petitioner a timeframe to comply with the tax obligations, thus setting aside the cancellation.
Treatment of competing arguments: The respondents' insistence on procedural adherence was acknowledged, but the court prioritized practical outcomes over strict procedural enforcement.
Conclusions: The court concluded that reinstatement of registration was appropriate, contingent on compliance with specified conditions.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "Taking note of the fact 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."
Core principles established: The judgment reinforces the principle that procedural defaults should be rectified in a manner that supports business continuity and tax recovery, unless there is evidence of fraudulent intent.
Final determinations on each issue: The court set aside the cancellation order, conditional upon the petitioner filing all overdue returns and paying the requisite taxes, interest, fines, and penalties within four weeks. The court directed the respondents to enable the petitioner to comply by activating the necessary online portal.

The judgment ultimately emphasizes a balanced approach, prioritizing both compliance with tax laws and the practical implications of business operations and tax recovery.

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