Kala Imaging World vs. The Superintendent - Kerala High Court, 10 November 2020

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR TUE AY, THE 10TH DAY OF NOVEMBER 2020 / 19TH KARTHIKA, 1942 WP(C).No.20071 OF 2020(H) PETITIONER/S: KALA IMAGING WORLD EAST FORT, THRISSUR, REPRESENTED BY ITS MANAGING PARTNER, K.T. MARSHAL, AGED 44, S/O. THOMAS KAVALAKKAD. BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT/S: 1 THE SUPERINTENDENT CENTRAL TAX AND CENTRAL EXCISE, CHEMBUKKAVU RANGE, THRISSUR-680 001 2 GOODS AND SERVICES TAX NETWORK PVT. LTD EAST WING, 4TH FLOOR, WORLD MARK-1, AEROCITY, NEW DELHI-110 037, REPRESENTED BY ITS MANAGING DIRECTOR. R1 BY SRI.P.R.SREEJITH, SC, CENTRAL BOARD OF EXCISE AND CUSTOMS R2 BY SHRI.P.R.SREEJITH, SC, GSTN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.11.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No.20071 OF 2020(H) 2 JUDGMENT

The petitioner, who is an assessee to GST on the rolls of the 1st respondent, preferred an application to cancel his registration under the GST regime as he decided to transfer the business as a whole to a 3rd party. Unfortunately for the petitioner, in the application that he had preferred for cancelling the registration, he had inadvertently shown the reason for cancellation as ‘discontinuance of business/ closure of business’ whereas, in fact the reason ought to have been, "transfer of business on account amalgamation, merger, demerger, sales, lease or otherwise". While the cancellation of the registration took place for the reasons shown in the application form, the petitioner on realizing the mistake, immediately contacted the 1st respondent and sought for a change of the reason for cancellation of registration. The 1st respondent then informed him through Ext.P8 communication that the change of reason could not be carried out through the system, in an order that had already been passed cancelling a registration. It is therefore that the petitioner has approached this Court through the present writ petition, impugning the said communication of the respondent.

Through a statement filed on behalf of the respondents 1 and 2, it is stated that as per the provisions of Section 30 of the CGST Act, revocation is possible only in cases where the proper officer cancels the registration on his own motion and revocation is not provided when the party had himself applied for cancellation under Section 29 by citing a wrong reason for cancellation. It is further stated that the petitioner ought to make a fresh request to revoke the cancellation and restore the GSTIN that was cancelled on the grounds of closure/discontinuance of business, and once again cancel the said GSTIN

WP(C).No.20071 OF 2020(H) 3 selecting the correct applicable reason and thereafter transfer un-utilised ITC in accordance with law.

I have heard the learned counsel appearing for the petitioner and also Sri. P.R Sreejith, the learned Standing Counsel appearing for the respondents. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I am of the view that it is apparent from the sequence of events narrated in the writ petition that the original cancellation of registration, on the ground that there was a closure/discontinuance of business, was an erroneous one, in that the petitioner had erroneously chosen the said reason instead of the actual reason, which was the transfer of business to an another entity. This is not a case where the petitioner changed his mind subsequently, and sought to insert a new reason in place of the old one, for the communication produced by the petitioner as Ext.P2 would clearly suggest that steps were taken by the petitioner almost immediately after the receipt of the order of cancellation of registration to make the correction as aforesaid. Under such circumstances, I am of the view that the 1st respondent cannot plead helplessness in the matter of correction of an apparent mistake that occurred while making an application for cancellation of registration. I am therefore of the view that the 1st respondent should take steps to change the reasons for cancellation of registration of the petitioner to ‘transfer of business on account amalgamation, merger, demerger, sales,leased or otherwise’ and issue a fresh order of cancellation of registration citing the above as a reason for the cancellation. To enable the 1st respondent to do so, I quash Ext.P8 order and direct the 1st respondent to adopt a suitable procedure and issue the fresh order of cancellation of registration as indicated above to the petitioner within a period

WP(C).No.20071 OF 2020(H) 4 of one month from the date of receipt of a copy of this judgment. On receipt of the said order of cancellation of registration, it would be open to the petitioner to apply for a transfer of the accumulated input tax credit in favour of the new business entity to which his business was transferred.

The writ petition is disposed as above. A.K.JAYASANKARAN NAMBIAR JUDGE SJ

WP(C).No.20071 OF 2020(H) 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF ORDER OF CANCELLATION OF REGISTRATION. EXHIBIT P2 COPY OF APPLICATION SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. EXHIBIT P3 COPY OF JUDGMENT IN W.P.(C) NO. 5924/2019 OF THIS HON'BLE COURT. EXHIBIT P4 COPY OF RECORD OF PERSONAL HEARING ISSUED BY THE 1ST RESPONDENT. EXHIBIT P5 COPY OF THE PRESS RELEASE OF THE GST COUNCIL. EXHIBIT P6 COPY OF RECOMMENDATIONS OF GST COUNCIL. EXHIBIT P7 COPY OF LETTER SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. EXHIBIT P8 COPY OF ORDER ISSUED BY THE 1ST RESPONDENT . EXHIBIT P9 COPY OF THE ORDER ISSUED BY THE 1ST RESPONDENT.