2024 (10) TMI 1432 - HC - GST

Cancellation of GST registration due to non-filing of returns - rejection of appeal on the ground of time limitation - respondent claims that the Statue prescribes specific limitation period of 90 days to file an appeal and the appeal filed by the petitioner is a time barred one - HELD THAT - This Court in TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR 2022 (2) TMI 933 - MADRAS HIGH COURT , wherein it was held that no useful purpose would be served keeping the petitioners out of the Goods and Service Tax regime as such the assessee would still continue to his businesses and supply goods and services. The petitioner in this case is doing hotel business. Most of the small scale entrepreneurs like carpenters, electricians, fabricators etc... are almost uneducated and they are not accustomed with handling of e-mails and other advance technologies. Though they are providing e-mail IDs at the time of Registration, the applications are prepared by some agents by creating an e-mail IDs, however, on reality most of the Traders are not accustomed with handling of e-mails - the uneducated traders can also respond to these notices to some extent, otherwise, these notices will be an empty formality and will not serve any purpose for which it has been issued. The object of any Government is to promote the trade and not to curtail the same. The method, which is adopted by the Department as on today is like strangulating the neck of the small scale entrepreneurs. The cancellation of registration certainly amounts to a capital punishment so for as the traders are concerned. If they are not filing an appeal with in the statutory period, then his entire business comes to stand. He cannot do any business activities and without business, he cannot pay salaries to his employees, pay bills to the loans and ultimately, all his developments over a long period of time could be ruined in few months and it is also very difficult to regain the business in this competitive world. Therefore, the Department of GST has to think of the consequences and relax the rules and also find the modalities of conveying the show cause notice by way of SMS and also in the regional languages. This court expects the Department of GST to take appropriate action by amending the relevant provisions considering the consequences on traders. These writ petitions are disposed of.

Issues Involved:

1. Cancellation of GST registration due to non-filing of returns.
2. Rejection of appeal on grounds of limitation.
3. Impact on the petitioner's right to livelihood and trade.
4. Interpretation of GST provisions in light of constitutional rights.
5. Procedural fairness and communication by the GST department.

Detailed Analysis:

1. Cancellation of GST Registration Due to Non-Filing of Returns:

The petitioner, a small hotel owner, faced cancellation of his GST registration for failing to file returns over a continuous period of six months. The petitioner attributed this failure to financial crises and unforeseen circumstances but later filed the returns with penalties and interest. The cancellation was executed in accordance with the GST Act, which mandates such action for non-compliance. The court acknowledged the procedural adherence by the department, including the issuance of a show-cause notice, and the petitioner's subsequent response.

2. Rejection of Appeal on Grounds of Limitation:

The petitioner's appeal against the cancellation was dismissed by the department due to being time-barred. The statutory period for filing an appeal under the GST Act is 90 days, which the petitioner exceeded. The court noted that while the Deputy Commissioner of State Tax lacks the authority to condone delays beyond 30 days, the strict application of limitation periods can leave individuals without remedy, particularly in exceptional circumstances like the pandemic.

3. Impact on the Petitioner's Right to Livelihood and Trade:

The court highlighted the severe impact of GST registration cancellation on the petitioner's livelihood, referencing similar judgments from the Bombay High Court and Uttarakhand High Court. The denial of GST registration affects the petitioner's ability to conduct business, thereby infringing on his constitutional right to livelihood under Article 21 and the right to trade under Article 19(1)(g). The court emphasized that the GST provisions should not be interpreted to deny these fundamental rights.

4. Interpretation of GST Provisions in Light of Constitutional Rights:

The judgment drew parallels with other cases where courts exercised their jurisdiction under Article 226 of the Constitution to address grievances stemming from GST registration cancellations. The court underscored that constitutional guarantees must be enforced, and the GST enactment should facilitate rather than hinder trade. The court referenced the Supreme Court's stance that constitutional remedies cannot be curtailed by statutory provisions, advocating for a balanced approach that respects legislative intent while safeguarding fundamental rights.

5. Procedural Fairness and Communication by the GST Department:

The court criticized the current communication methods employed by the GST department, which may not effectively reach small-scale traders who are often unaccustomed to digital communications. The judgment suggested that notices should be issued in regional languages and through SMS to ensure better accessibility and understanding. The court urged the department to consider amending relevant provisions to prevent undue hardships on traders due to procedural technicalities.

Conclusion:

The writ petition was disposed of in line with the guidelines established in the Suguna Cutpiece case, emphasizing the need for procedural flexibility and the protection of constitutional rights. The court called for the GST department to revise its practices to better support small-scale entrepreneurs and uphold their right to trade and livelihood.

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