Dadabhai Constructions vs. Union Of INDIA And Ors.

Held

The Court held that the cancellation of the petitioner's registration was based on non-filing of returns, and it was not the respondents' case that the petitioner was evading tax. The Court noted that revoking a registration can be counterproductive to revenue interests, as it prevents the petitioner from carrying on business and raising invoices, ultimately impacting tax recovery. Therefore, a pragmatic view was warranted. Following the direction issued in the case of Subhakar Golder, the Court proposed to set aside the order cancelling the petitioner's registration. This was made conditional upon the petitioner filing all pending returns, paying the requisite tax, interest, fine, and penalty within four weeks of receiving the order. The jurisdictional officer was directed to restore the petitioner's registration if these conditions were met. The Court also directed the respondents to activate the petitioner's portal and login credentials within one week to facilitate compliance.

Facts

The petitioner, Dadabhai Constructions, filed a writ petition challenging the order dated 24th July, 2024, cancelling its registration under the WBGST Act, 2017. The cancellation was based on the petitioner's failure to furnish returns for a continuous period of six months. The petitioner contended that it was willing to comply with the Act and had not filed a reply to the show cause notice due to oversight. The petitioner relied on a previous High Court judgment in Subhakar Golder v. Assistant Commissioner of State Tax, where a similar cancellation order was set aside subject to conditions. The CGST authorities argued that the cancellation was justified due to non-compliance with statutory provisions and that the petitioner was given an opportunity to show cause.

Key Issues

1. Whether the cancellation of the petitioner's GST registration for non-filing of returns, despite the petitioner's willingness to comply and pay dues, is sustainable under the WBGST Act, 2017? The petitioner argued that the cancellation of registration would be counterproductive, hindering tax recovery as the petitioner would be unable to raise invoices. They relied on the principle laid down in Subhakar Golder v. Assistant Commissioner of State Tax, where similar cancellations were set aside on condition of compliance. The petitioner sought to be allowed to file returns and have their registration restored. The revenue (CGST authorities) contended that the petitioner had not complied with statutory provisions, and since no reply was filed to the show cause notice, the cancellation was procedurally correct and there was no irregularity on their part.