2024 (9) TMI 1288 - HC - GST

Cancellation of registration and the dismissal of an appeal filed - time limitation - Constitutional validity of Section 29(2) of the CGST Act and BGST Act - applicability of Article 19(1)(g) and Article 21 of the Constitution of India - HELD THAT - The petitioner admittedly did not agitate the cause within the four walls of the statute and hence has raised the question of constitutional validity of Section 29 (2) under both the enactments. The decision in Rohit Enterprises 2023 (2) TMI 759 - BOMBAY HIGH COURT which only has a persuasive effect, which also does not have any declaration of law and has only exercised discretion under Article 226 of the Constitution of India on the facts which came out therein. The facts though not identical, the hardship projected is almost similar to that in CWJC 11874 of 2024 and the Division Bench of the High Court found that the constitutional guarantee to carry out trade and commerce is unconditional and unequivocal and it must be enforced regardless of shortcomings in the scheme of the GST enactment. There is no ground validly raised against the delay in filing an appeal - Section 30 which provides for revocation of cancellation of registration if applied for within thirty days. There arev absolutely no reason to exercise our discretionary power to interfere with the orders passed; clearly within the boundaries of the statute - there are no reason to entertain the writ petition on the ground of testing the constitutional validity of Section 29 (2) - The writ petition is dismissed.

Issues Involved:
1. Cancellation of GST registration.
2. Delay in filing appeals against cancellation.
3. Constitutional validity of Section 29(2) of the CGST Act and BGST Act.
4. Applicability of Article 19(1)(g) and Article 21 of the Constitution of India.
5. Relevance of the Supreme Court's extension of limitation period during the pandemic.
6. Application of the Amnesty Scheme for revocation of cancellation.

Issue-Wise Detailed Analysis:

1. Cancellation of GST Registration:
The petitioners, registered under the CGST Act and BGST Act, challenged the cancellation of their GST registration. The cancellation orders were issued based on non-compliance with tax return filings. The petitioners argued that the cancellation violated their fundamental rights under Article 19(1)(g) and Article 21 of the Constitution of India. The court observed that the petitioners did not avail the statutory remedies in time and failed to utilize the window of relief provided by a notification for the restoration of registration.

2. Delay in Filing Appeals Against Cancellation:
Both petitioners faced delays in filing appeals against the cancellation orders. In CWJC 11874 of 2024, the appeal was filed after approximately two years from the extended limitation period. Similarly, in CWJC 11941 of 2024, the appeal was filed after about three years and one month from the extended limitation period. The court noted that the petitioners did not provide satisfactory reasons for the delays and did not utilize the extension of limitation granted by the Supreme Court during the pandemic.

3. Constitutional Validity of Section 29(2) of the CGST Act and BGST Act:
The petitioners challenged the constitutional validity of Section 29(2) of the CGST Act and BGST Act, which provides for the cancellation of registration. The court observed that this challenge was a last-ditch effort since the petitioners had not availed statutory remedies in time. The court referred to the decision in Rohit Enterprises vs. Commissioner, Aurangabad & Ors., but disagreed with the view that the constitutional guarantee to carry out trade and commerce is unconditional and unequivocal.

4. Applicability of Article 19(1)(g) and Article 21 of the Constitution of India:
The court held that Article 19(1)(g) is tempered with the exception under Article 19(2). The GST enactment requires compliance with tax laws for continued registration. The court emphasized that the power to register includes the power to cancel registration for non-compliance, as provided under Section 29(2). The court cited the Constitution Bench decision in M.A. Rahman and Others vs. The State of Andhra Pradesh, which upheld the reasonableness of cancellation provisions for tax compliance.

5. Relevance of the Supreme Court's Extension of Limitation Period During the Pandemic:
The court acknowledged the Supreme Court's extension of the limitation period due to the pandemic, which allowed appeals to be filed within three months from 01.03.2022. However, the petitioners in both cases failed to file their appeals within this extended period. The court found no valid reasons for the delays and held that the extension of limitation did not apply to their cases.

6. Application of the Amnesty Scheme for Revocation of Cancellation:
Section 30 of the CGST Act and BGST Act provides for revocation of cancellation if applied for within thirty days. Additionally, Circular No. 3 of 2023 introduced an Amnesty Scheme allowing the restoration of registration on payment of dues between 31.03.2023 and 31.08.2023. The court noted that the petitioners did not avail of this remedy either. The court found no reason to exercise discretionary power to interfere with the orders passed within the boundaries of the statute.

Conclusion:
The court dismissed the writ petitions, finding no reason to interfere with the cancellation orders. The petitioners failed to utilize statutory remedies and extensions provided during the pandemic. The constitutional challenge to Section 29(2) was deemed an afterthought, and the court upheld the reasonableness of the cancellation provisions for ensuring tax compliance.

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