Suspension of GST registration is counterproductive and affects tax recovery

[CA Bimal Jain]

The Hon’ble Calcutta High Court in BISWESWAR MIDHYA, PROPRIETOR OF MIDHYA CONSTRUCTION VERSUS THE SUPERINTENDENT, CGST & CX RANGE V, HALDIA II DIVISION, HALDIA CGST & CX COMMISSIONERATE & ORS. - 2022 (9) TMI 120 - CALCUTTA HIGH COURT disposed off the writ petition directing the assessing authority to forthwith revoke the suspension of the assessee’s registration. Further directed the assessing authority to issue show cause notice within seven days from the date of receipt of this order.

Facts:

Bisweswar Midhya (“the Appellant”) filed a writ petition challenging a show cause notice (“SCN”) dated July 21, 2022. The SCN was issued for cancellation of Goods and Services Tax (“GST”) registration granted to the Appellant. The primary ground on which the Appellant challenged the SCN was that there was no final order of adjudication passed by the competent assessing authority (“the Respondent”) quantifying the tax liability payable by the Appellant.

Moreover, summons were issued to the Appellant and the Appellant has been responding to the summons by submitting representations to the Respondent, but the Respondent did not proceed further pursuant to the summons. The writ petition is still pending and the direction to file affidavits has been issued. The Appellant is aggrieved by non-granting of any interim order pending disposal of the writ petition.

Therefore, the Appellant filed this intra-court appeal.

Issue:

Whether or not suspension of GST registration affects the recovery of taxes?

Held:

The Hon’ble Calcutta High Court in BISWESWAR MIDHYA, PROPRIETOR OF MIDHYA CONSTRUCTION VERSUS THE SUPERINTENDENT, CGST & CX RANGE V, HALDIA II DIVISION, HALDIA CGST & CX COMMISSIONERATE & ORS. - 2022 (9) TMI 120 - CALCUTTA HIGH COURT, held as under:

• Stated that if the registration of the Appellant is cancelled, the Appellant cannot carry on its business in the sense that no invoice can be raised by the Appellant. This would ultimately impact the recovery of taxes. Therefore, the Respondent has to take a pragmatic view in the matter.
• Disposed off this Intra-court appeal as well as the writ petition by directing the Respondent to revoke the suspension of the Appellant’s license and directed the Respondent to issue an SCN within seven days from the date of receipt of the server copy of this order.
• Directed that the Appellant shall be given a reasonable time to submit his objection as against the SCN. Thereafter, the SCN shall be adjudicated and a reasoned order should be passed on merits and in accordance with the law.

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