Tarun Kumar Kundu, Proprietor Of Arka Enterprise vs. Union Of INDIA And Ors.
Original PDF →Facts
The petitioner, Tarun Kumar Kundu, filed a writ petition challenging an order dated March 22, 2021, which cancelled his GST registration. The cancellation was based on the ground of non-furnishing of returns under Section 39 of the GST Act. The petitioner expressed his willingness to continue his business, comply with the Act's provisions, and pay all outstanding tax, interest, penalty, and fine. The respondents are the Union of India and other GST authorities. The procedural history involves a show cause notice leading to the cancellation order, and an appellate order dated February 18, 2025, which was also challenged.
Held
The Court held that the cancellation of the petitioner's GST registration was unsustainable on the sole ground of non-furnishing of returns, especially when there was no allegation of tax evasion. The Court reasoned that revoking registration in such cases is counterproductive to the revenue's interest, as it prevents the assessee from conducting business, raising invoices, and consequently, contributing to tax recovery. The Court found that a pragmatic view was necessary. Accordingly, the Court set aside the order of cancellation dated March 22, 2021, and the appellate order dated February 18, 2025. The petitioner was directed to file all pending returns and pay the applicable tax, interest, penalty, and fine within four weeks. If compliance is achieved, the registration will be restored by the Jurisdictional Officer. The respondents were directed to activate the petitioner's portal and login credentials within one week to facilitate compliance. Failure to comply would result in the writ petition being automatically dismissed. No issue was expressly left undecided.
Key Issues
1. Whether the cancellation of GST registration for non-furnishing of returns, without alleging tax evasion, is sustainable, and if the Court should permit the petitioner to continue business. (Section 39 of the GST Act). The petitioner argued that he is willing to comply with the GST provisions and pay all dues, and that continuing his business is essential for tax recovery. The petitioner contended that the cancellation would be counterproductive to revenue interests as he would be unable to raise invoices. The revenue or State's arguments are not explicitly recorded in the judgment, but their action of cancelling the registration implies a stance that non-compliance warrants such action.
Sections Cited
Section 39
AI-generated summary — verify with the full judgment below
M/L 60 03.09.2025 sb
Ct.
IN THE HIGH COURT AT CALCUTTA CONSTITUTIONAL WRIT JURI ICTION APPELLATE SIDE Tarun Kumar Kundu Versus Union of India & Ors.
Mr. Rajarshi Chatterjee
Mr. Suman Sahani
… For the petitioner
Mr. Ranjan Kumar Sinha
Mr. Aritra Shankar Roy
… For Union of India.
Ms. Manasi Mukherjee
Mr. Bijitesh Mukherjee
… For the respondent nos. 2 to 4. 1. Challenging the order of cancellation dated 22nd March, 2021 passed under the provisions of WBGST/CGST Act, 2017 (hereinafter referred to as the “said Act”), the instant writ petition has been filed.
Mr. Chatterjee, learned advocate appearing in support of the writ petition would submit that the petitioner is interested to continue with the business and is agreeable to comply with the provisions of the said Act and to pay the outstanding tax, interest, penalty and fine as may be applicable.
Having heard the learned advocates appearing for the respective parties, it would transpire that pursuant to a show cause notice, the aforesaid order of cancellation of registration was issued on the ground of non-furnishing of returns under Section 39 of the said Act.
I find in this case that the registration of the petitioner had been cancelled on the ground of non-filing of returns. It is not the case of the respondents that the petitioner had been adopting dubious process to evade tax. Taking note of the fact that the suspension/revocation of registration would be counterproductive and works against the interest of the revenue since, the petitioner in such case would not be able to carry on his business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of tax, I am of the view that the respondents should take a pragmatic view in the matter and permit the petitioner to carry on his business.
Having regard to the aforesaid, I propose to set aside the order of cancellation dated 22nd March, 2021, subject to the condition that the petitioner files the returns for the entire period of default and pays requisite amount of tax, interest, penalty and fine as may be applicable.
It is made clear that if the petitioner complies with the directions/conditions noted above within four weeks from date of receipt of the server copy of this order, the petitioner’s registration under the said Act shall be restored by the Juri ictional Officer. However, if the petitioner fails to comply with the directions as aforesaid, the benefit of this order will not enure to the petitioner and the writ petition would stand automatically dismissed.
For the purpose of compliance of the above directions, the respondents are directed to activate the petitioner’s portal and login credentials within one week from date so that the petitioner can file his returns, pays requisite amount of tax, interest, fine and penalty.
As a sequel thereto, the appellate order dated 18th February, 2025 is also set aside.
With the above observations and directions, the writ petition is disposed of.
Parties shall act on the basis of the server copy of this order duly downloaded from the official website of this Hon’ble Court.
Urgent Photostat certified copy of this order, if applied for, be made available to the parties upon compliance of requisite formalities.
(Raja Basu Chowdhury, J.)
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.