Suprovat Gayen vs. Superintendent Of Central Tax, Range-I, Behala Division And Ors.
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The petitioner, Suprovat Gayen, filed a writ petition challenging the order dated May 25, 2024, cancelling his GST registration. The cancellation was based on the petitioner's failure to file returns for a continuous period of six months, as communicated via a show cause notice on September 6, 2023. The petitioner contended that he intended to comply with the GST Act but failed to bring this to the respondents' notice. He relied on a previous High Court judgment in Subhankar Golder v. Assistant Commissioner of State Tax, where similar cancellations were set aside on conditions. The respondents argued that the cancellation was justified due to the petitioner's failure to file a proper reply to the show cause notice, and that no revocation application or appeal was filed. They asserted no irregularity in their actions.
Held
The Court held that the cancellation of the petitioner's GST registration was based on non-filing of returns. It was not alleged that the petitioner was engaged in tax evasion. The Court considered that suspending or revoking registration could be counterproductive and detrimental to revenue collection, as it would prevent the petitioner from raising invoices and impact tax recovery. Therefore, the Court decided to set aside the cancellation order dated May 25, 2024. This decision was made subject to the condition that the petitioner files all pending returns for the period of default and pays the requisite tax, interest, fine, and penalty within four weeks of receiving a server copy of the order. The Court directed the respondents to activate the portal within one week to facilitate the petitioner's compliance. If the petitioner fails to comply, the writ petition would stand dismissed. The ratio decidendi is that a pragmatic approach should be taken in cases of non-filing of returns, especially when tax evasion is not alleged, to ensure eventual tax recovery, and that the principles laid down in Subhankar Golder should be followed.
Key Issues
1. Whether the order cancelling the petitioner's GST registration for non-filing of returns is sustainable in law, particularly in light of the petitioner's submission of intent to comply and reliance on precedent? The petitioner argued that the cancellation order should be set aside, similar to the case of Subhankar Golder, provided he files all pending returns and pays the requisite tax, interest, fine, and penalty. The petitioner's counsel emphasized that the petitioner was always willing to comply with the Act. The respondents contended that the cancellation was valid as the petitioner failed to file a proper reply to the show cause notice, did not file a revocation application, and did not file an appeal. They maintained that their actions were not irregular.
Sections Cited
Section 29
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30 SM
2025. WPA 29610 of 2024
Suprovat Gayen Vs. Superintendent of Central Tax, Range-I, Behala Division, CGST & CX, Kolkata South Commissionerate & Ors.
Mr. Debanuj Basu Thakur … for the petitioner Ms. Manasi Mukherjee Mr. Bijitesh Mukherjee … for the state
The present writ petition has been filed, inter alia, challenging the order of cancellation of registration of the petitioner dated 25th of May, 2024 passed under the Central/West Bengal Goods and Services Tax Act, 2017 (Hereinafter referred to as the “Said Act”). It is the petitioner’s case that on 6th September, 2023, the petitioner was served with a show cause as to why the registration of the petitioner under the said Act shall not be cancelled for the petitioner having failed to file his returns for a continuous period of six months. Mr. Basu Thakur, learned advocate appearing for the petitioner submits that the petitioner was and is all along interested to comply
2 with the provisions of the said Act, unfortunately the aforesaid fact could not be appropriately brought to the notice of respondents. By placing reliance on a judgment of the Hon’ble Division Bench of this Court delivered in the case of Subhankar Golder Versus Assistant Commissioner of State Tax, Serampore Charge (MAT 639 of 2024) on 9th April, 2024, it is submitted that in similar circumstances, similar order of cancellation of registration had been set aside, subject to the condition that the petitioner files returns for the entire period of default, pays requisite amount of tax, interest, fine and penalty. He submits that this Court may be pleased to set aside the order of cancellation and allow the petitioner to file his returns on the same terms. Ms. Mukherjee, learned advocate appearing on behalf of the respondents on the other hand submits that in the instant case although a show cause notice was issued, since the petitioner did not file any proper reply, the registration was cancelled. The petitioner did neither file any revocation application nor did the petitioner file any appeal. According the respondent authorities, there is no irregularity on the part of the
3 respondent authorities in cancelling the registration. Heard the learned advocates appearing for the respective parties and considered the materials on record. Admittedly, I find 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 licence would be counterproductive and work against the interest of the revenue, since the petitioner in such a 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, therefore, 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. I find from the submissions made by the respondents that unless, the petitioner files his returns, the respondents cannot determine the final liability. Having regard to the aforesaid and taking note of the direction issued by the Hon’ble Division
4 Bench of this Court in the case of Subhankar Golder (supra), I propose to set aside the order dated 25th May, 2024 cancelling the registration of the petitioner subject to the condition that the petitioner files his returns for the entire period of default and pays requisite amount of tax, interest, fine and penalty. It is made clear that if the petitioner complies with the directions/conditions noted above, within four weeks from the 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 portal within one week from date, so that the petitioner can file his returns, pays requisite amount of tax, interest, fine and penalty. With the above direction and observations, the writ petition being WPA 29610 of 2024 is disposed of. There shall be no order as to costs.
5 All parties shall act on the server copy of this order duly downloaded from the official website of this Court.
(Rajarshi Bharadwaj, 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.