cancellation of registration, Goods and Services Tax - GST

[bk r]

A ltd company is registered with GST having a principal place of business in Delhi North and also showing/having three additional places of buisness at Delhi south, east and west . The additional place of business was earlier registered with the Central Excise as Registered dealer and we took also cenvat credit in respect of stack available as on 30.06.2017 as transitional credit in respect of purchase made by these Additional place of business. The department asked telephonicaly to submit the record we submit all the documents regarding stock receipt and invoices regarding puchase of material in respect of additional place of business as there was neary about 6 crores of amount was involved in tran-1. There is no physical business activity at the principal place of business and only documents kept here and file return. the business is now being done from additional place of business only i.e. from Delhi South, west and East. we neither done business from principal place of business nor issued any invoice from this place . The Central GST officers visited our principal place of business in April 2018.and found that the plot No registered as principal place of business is a vacant plot . they also videographed this and recorded panchnama also in token of vacant plot showing as principal place of business. This is fact that this is a vacant plot. I kept all the record at my house situated in Gurugram. Department issued SCN regarding cancellation of registration w.e.f. 01/07/2017 and also proposed disallowing of Trans 1 credit availed and other ITC availed during July to April 2018 in respect of additional place of business also . there is no activity at the principal place of business. A personal hearing was also given and we defend our case on the argue that the business activity actually took place form the additionl place of business and it is true. We also accepted that the principal place of business is a vacant plot . Now the department issued order regarding cancellation of GST registration w.e.f. 01.07.2017 and also initiated action for recocvry of trans I credit and other ITC availed during 01.07.2017 till date .Whether the department action for cancellation of registration w.e.f. 01/07/2017 is correct and proposal regarding recovery of Trans 1 credit and other ITC availed during 01/07/2017 to March 2018 is also correct. My additional place of business is working at the declared place.

Posts / Replies

[DR.MARIAPPAN GOVINDARAJAN]

In my view the action of the Department is correct since your principal place of business is a vacant one. You may file appeal contending that the credit sought to be availed on TRAN-1 is genuine. Or you may file a writ petition seeking the direction to consider the credit by the Asssessing Officer.

[YAGAY and SUN]

We endorse the view of the expert.

[KASTURI SETHI]

I also support the views of Dr.Govindarajan, Sir. Credit cannot be denied. Hope the querist will win the case. It should not have happened.

[bk r]

thanks for your reply. Now what will be happened in respect of sale invoices issued during July 2017 to April 2018 by additional place of business having the same registration no on the invoices. As registration has been cancelled w.e.f. 01.07.2017 then in this case the ITC taken by our buyers will be eligible or any action will be taken by the department against our buyers as they verbally informed that they will recover the ITC from our buyers

[KASTURI SETHI]

In view of situation explained by you, the Department can recover ITC from your buyers. You issued the invoice when you were registered with the department. It is a temporary setback. You will have to suffer the rigours of litigation. In my opinion you have not acted in a mala fide manner. Cancellation of registration from the date of issue, is technical matter and it cannot monetary loss to you. Your invoices were valid and are valid. Substantive right cannot be forfeited due to such technical infractions.There is no other eescape route except to face litigation.

[KASTURI SETHI]

Dear Querist, .Two factors can tilt the case in your favour. 1.Date of issuance/communication of order of cancellation of registration retrospectively. 2.Your bona fides.

[bk r]

Thanks sethi sir,

I admitted in the statement tendered before the CGST officer that the plot was vacant on 01.07.2017 and plot owner also give statment that as on 01.07.2017 the plot was vacant .

[bk r]

Further the department initated action when the 3 letters sent by department for trans 1 enquiry was received back undelivered to the department . and then department came to know about this.

[KASTURI SETHI]

O.K. You have admitted the factual position and letters too were received back undelivered. Facts cannot be concealed. You are to prove that there was no mala fide intention on your part for keeping the plot vacant. Was there no room, no walls, no roof, no gate in the business premises ?. Does it not lookalike business premises ? Main point is that there should be genuine transaction. There should be no revenue loss at all in any way. If you concentrated on additional place of business instead of principal place of business, you have not caused any loss to Govt. However, you should have intimated your jurisdictional GST Officer about commencement of business first at additional place of business instead of principal place of business.

If your transaction is genuine, you can get relief through the court. Litigation is not a cake walk. It is based on what is on records. The whole issue revolves around proving your bona fides. Situation can take any serious shape. You need immediate advice from expert advocate.

[bk r]

sir there is no room in plot, only boundry wall of 3 feet height with one main gate. There is no rent agreement with the plot owner regarding rent w.e.f. 01.07.2017. however additional place of business was declared at the time of registration and they actually exixts.

[DR.MARIAPPAN GOVINDARAJAN]

When the registered principal place of business is not in existence how the Department will release you. It will do your duty. In respect of credit you have no other option except to file a writ petition before the High Court.

[KASTURI SETHI]

I agree with Dr.Govindarajan Sir. You should have not declared such vacant plot as principal place of business. Now this lapse is on records. It puts question mark on genuine transaction for future as well as present. You may not have done any wrong transaction but facts on records indicate othewise. What is the logic or purpose/reason declaring vacant plot as principal place of business ?

[Alkesh Jani]

Sir, I agree with the views expressed by our experts, however, even a bird passing land can be called premises, as it was held by Supreme Court of India and registration is to be granted. Please search for this decision. hope it may help you to contest.

Thanks

[DR.MARIAPPAN GOVINDARAJAN]

I do not agree with the views of Sri Alkesh. In taxation matters there would be a business in the principle place of business. Otherwise focus business entities will be more. The Government recently struck of nearly 2 Lakhs focus companies.

[KASTURI SETHI]

Definition of premises is different under vsrious Acts depending upon various purposes/situations. I recall around 25 years I read a definition of road in a case decided by the Hon'ble Supreme Court. In that case (criminal), the Apex Court had held , "Road is a building without roof and walls". In the present situation, there is a different purpose . There are walls only and no room at all. In my view, it cannot be called a building or premises. We cannot keep good in open space. Goods will not be safe. The department has videographed the vacant plot. The department has booked so many cases where the firm does not exist physically and the Govt. officer who verified the premises was in trouble.