Mohammad Javed vs. Union Of INDIA And Ors.

Facts

The petitioner, Mohammad Javed, filed a writ petition challenging an order dated January 30, 2025, which cancelled his GST registration under the CGST Act, 2017/WBGST Act, 2017. The cancellation was based on the ground of failure to furnish returns for prescribed periods. The petitioner expressed his willingness to continue the business and comply with the Act by paying all outstanding taxes, late fees, interest, penalty, and fine. He also cited a co-ordinate bench decision in a similar case where registration was restored after cancellation for non-furnishing of returns. The revenue did not contend that the petitioner was involved in tax evasion, fraudulent transactions, or any similar misconduct.

Held

The Court held that since the cancellation of the petitioner's GST registration was solely for non-furnishing of returns, and there were no allegations of tax evasion, fraudulent transactions, or other misconduct, the petitioner should be granted an opportunity to restore his registration. The Court reasoned that the intent of the GST Act is to facilitate business, and a strict approach leading to permanent cancellation for procedural lapses, without any underlying dishonesty, might not be in line with this objective. The ratio decidendi is that procedural defaults like non-filing of returns, in the absence of fraudulent intent, should be curable by allowing the assessee to rectify the default and pay all dues, thereby promoting compliance. Accordingly, the Court directed that if the petitioner files all pending returns and pays all outstanding taxes, interest, late fees, fine, and penalty within six weeks, his registration shall be restored. The impugned order of cancellation dated January 30, 2025, would then be treated as set aside. The Court also directed the GST authorities to activate the petitioner's portal for compliance. The writ petition was disposed of with a clear stipulation that failure to comply would result in the automatic dismissal of the petition.

Key Issues

1. Whether the cancellation of GST registration for non-furnishing of returns, without allegations of tax evasion or fraud, warrants an opportunity for restoration? (Question of law turning on the principles of natural justice and the intent of the GST legislation). Petitioner's Arguments: The petitioner argued that he is willing to comply with all statutory obligations, including payment of outstanding dues and penalties. He contended that the Court has previously entertained similar writ petitions and directed the restoration of registrations cancelled solely for non-furnishing of returns. He relied on the decision in *Meheraj Midde –Vs- Superintendent of Central GST & CX, Range-V, Chowringhee Division & Ors.* to support his claim. Revenue's Arguments: The revenue did not dispute the petitioner's willingness to comply or the absence of allegations of fraud or tax evasion. Their contention was implicitly that the cancellation order was validly passed due to non-filing of returns.