Mr. Saravanan Rangaswamy vs. The Assistant Commissioner

WP/24805/2022HC KarnatakaGSTCNR KAHC01057125202229 March 2023Bench: B M SHYAM PRASAD4 pages

For Petitioner: SRI. SYED JAFFER MOHIYUDDIN., ADVOCATEFor Respondent: SRI. JEEVAN J. NEERALAGI, ADVOCATE

AI SummaryAllowed

Facts

The petitioner, Mr. Saravanan Rangaswamy, challenged an order dated 05.01.2022 passed by Respondent No. 1 (Assistant Commissioner, GST and Central Tax) cancelling his GST registration. The cancellation was based on the ground of non-filing of returns. The petitioner submitted a reply on 05.02.2022, explaining that the non-filing was due to financial constraints caused by the Covid-19 pandemic. Following this reply, the petitioner was permitted to file returns until June 2022, after which the registration was cancelled. The petitioner expressed willingness to file the pending returns and pay all outstanding taxes and dues. The impugned order dated 05.01.2022, according to the petitioner, only recorded non-filing of returns without considering the explanation provided in the reply.

Held

The Court held that the impugned order dated 05.01.2022 for cancellation of the petitioner's GST registration was arbitrary. The reasoning was that the order merely recorded the non-filing of returns without considering the petitioner's reply dated 05.02.2022, which offered an explanation for the delay due to financial constraints caused by the Covid-19 pandemic. The failure to consider this explanation rendered the order arbitrary and necessitated interference by the Court. The ratio decidendi is that administrative orders must consider all relevant material placed before the authority, and a failure to do so can lead to the order being set aside. The Court allowed the petition, quashing the cancellation order, subject to the petitioner filing all pending returns and paying the outstanding tax and other dues within four weeks from the date of the order. If the petitioner fails to comply, the cancellation order would stand revived.

Key Issues

1. Whether the order dated 05.01.2022 cancelling the petitioner's GST registration is arbitrary and liable to be quashed for failure to consider the petitioner's explanation for non-filing of returns, as contemplated under the relevant provisions of the GST law? Petitioner's Contention: The petitioner argued that the impugned order dated 05.01.2022 was arbitrary because it failed to consider his reply dated 05.02.2022, which provided reasons for the non-filing of returns, namely financial constraints due to Covid-19. He further submitted that he was willing to file the pending returns and pay all dues. The petitioner relied on the principle that a failure to consider a valid explanation renders an order arbitrary. Revenue's Contention: The judgment does not record any specific arguments made by the respondents (Revenue).

Sections Cited

Not specified

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

- 1 - WP No. 24805 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF MARCH, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 24805 OF 2022 (T-RES) BETWEEN: MR. SARAVANAN RANGASWAMY, S/O A RANGASWAMY, AGED ABOUT 48 YEARS, #345, PAZHAMURTHIR SOLAI, 2nd E MAIN, OMBR LAYOUT, KALYANANAGAR, BANGALORE, KARNATAKA - 560 043. …PETITIONER (BY SRI. SYED JAFFER MOHIYUDDIN.,ADVOCATE) AND: 1. THE ASSISTANT COMMISSIONER (GST AND CENTRAL TAX) OFFICE OF THE COMMISSIONER (APPEALS I) GST AND CENTRAL TAX, 7TH FLOOR, GST BHAVAN, LB STADIUM ROAD, TRAFFIC TRANSIT MANAGEMENT CENTRE BMTC BUILDING, 4TH FLOOR, ABOVE BMTC BUS STAND, DOMLUR, OLD AIRPORT ROAD, BENGALURU-560 071. 2. THE SUPERINTENDENT OF CENTRAL TAX RANGE-B, EAST DIVISION - 4, Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - WP No. 24805 of 2022 GST EAST COMMISSIONERATE BENGALURU - 560 071. …RESPONDENTS (BY SRI. JEEVAN J. NEERALAGI, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE IMPUGNED ORDER DATED 21.06.2022 PASSED BY RESPONDENT NO. 1 APPLICATION REFERENCE NO. (ARN), AA290122007487D, VIDE REFERENCE NO. ZA2906220700951 AT ANNEXURE- C; TO DIRECT RESPONDENT NO. 2 TO REVOKE THE CANCELLATION OF THE GST REGISTRATION OF THE PETITIONER. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN "B" GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:

ORDER

The petitioner has called in question the first respondent's order dated 05.01.2022 for cancellation of the petitioner's GST registration. The petitioner's GST registration is cancelled on the ground that he has not filed the returns. It is submitted on behalf of the petitioner that with the issuance of Show Cause Notice on 05.01.2022, the reply is filed on 05.02.2022 explaining that the returns have not been filed for the relevant tax period because of financial constraints brought about by the onset of Covid-19. After this - 3 - response, the petitioner is permitted to file returns until June 2022, and it is only thereafter the GST registration is cancelled. The petitioner is willing to file the necessary returns and also offer tax and the other demands in accordance with law. Crucially, it is argued that the petitioner's circumstances are set out in the reply dated 05.02.2022. It is seen from the impugned order dated 05.01.2022 that except for recording that the returns have not been filed, no other reasons are assigned. If the petitioner had filed reply dated 05.02.2022 offering certain explanation, the same should have been considered and the failure to so consider renders the order dated 05.01.2022 arbitrary, and as such, this Court must interfere but on terms. Hence the following: ORDER

The petition stands allowed quashing the order for cancellation of the GST registration dated 05.01.2022

- 4 - [Annexure-C] subject to the petitioner filing within four [4] weeks from today the returns for the relevant period and also paying the tax and the other dues. If the petitioner does not file returns or pay tax and demands as aforesaid, the order of cancellation shall stand revived. JUDGE

AN/-

Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.