Pranabesh Sarkar vs. Superintendent CGST And Cx And Ors.
Original PDF →Facts
The petitioner, Pranabesh Sarkar, filed a writ application challenging the order cancelling his GST registration. The cancellation was based on the petitioner's failure to file returns for a continuous period of six months. The petitioner contended that he intended to comply with the law but failed to file a response to the show cause notice. He relied on a Division Bench judgment of the same High Court in Subhakar Golder, where similar cancellations were set aside on conditions. The respondent authorities argued that the petitioner did not comply with statutory provisions and was given an opportunity to show cause, but failed to reply, leading to the cancellation. They maintained there was no irregularity in their action.
Held
The Court held that the cancellation of the petitioner's GST registration was primarily on the ground of non-filing of returns. It was not alleged that the petitioner was engaged in any dubious process to evade tax. The Court noted that suspending or revoking a registration can be counterproductive and detrimental to revenue, as it prevents the petitioner from raising invoices and impacts tax recovery. Therefore, the Court found it pragmatic to allow the petitioner to continue his business. Following the direction issued by the Division Bench in Subhakar Golder, the Court proposed to set aside the order of cancellation. This was made conditional upon the petitioner filing all pending returns for the period of default and paying the requisite amount of tax, interest, fine, and penalty, if not already paid. The Court directed the jurisdictional officer to restore the petitioner's registration if these conditions were met within four weeks. The portal was directed to be activated within one week to facilitate compliance. If the petitioner failed to comply, the writ petition would stand dismissed.
Key Issues
1. Whether the cancellation of the petitioner's GST registration for non-filing of returns, without considering the petitioner's intent to comply and the potential impact on revenue, is sustainable in law? (Mixed question of law and fact, turning on the principles of natural justice and the interpretation of relevant provisions of the CGST Act, 2017 and WBGST Act, 2017). Petitioner's arguments: The petitioner argued that he was interested in complying with the Act and that his failure to respond to the show cause notice was an oversight. He relied on the Division Bench judgment in Subhakar Golder v. Assistant Commissioner of State Tax, Serampore Charge, arguing that in similar circumstances, registration cancellations were set aside subject to the petitioner filing all pending returns and paying dues. He sought a similar relief. Revenue's arguments: The respondent authorities argued that the petitioner failed to comply with statutory provisions and did not reply to the show cause notice, justifying the cancellation. They contended that there was no irregularity in their actions.
Sections Cited
CGST Act, 2017, WBGST Act, 2017
AI-generated summary — verify with the full judgment below
Form No.J(2)
IN THE HIGH COURT AT CALCUTTA CONSTITUTIONAL WRIT JURI ICTION APPELLATE SIDE Present:
The Hon’ble Justice Raja Basu Chowdhury
WPA 14557 of 2024
Pranabesh Sarkar Versus Superintendent CGST & CX, Kalyani Division, Range-V & Ors.
For the petitioner : Mr. Sandip Choraria
Mr. Rishav Manna
For the State
: Mr. Uday Sankar Bhattacharya
Mr. Sujit Mitra
Ms. Banani Bhattacharya
For the respondent no.3: Mr. Debasish Chakraborty
Mr. Soumen Bhattacharya
Heard on
: 5th August, 2024
Judgment on : 5th August, 2024. Raja Basu Chowdhury, J:
The present writ application has been filed, inter alia, challenging the order of cancellation of registration of the petitioner under the Central Goods and Services Tax Act, 2017 and the West Bengal Goods and Services Tax Act, 2017 (Hereinafter referred to as the “said Act”).
2
It is the petitioner’s case that on or about 8th July, 2022, the petitioner was served with a notice of 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. Choraria, learned advocate appearing for the petitioner submits that the petitioner was and is all along interested to comply with the provisions of the said Act, unfortunately by reasons of his failure to file response the aforesaid fact could not be 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 Subhakar 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 and interest and fine and penalty. He submits that his Court may be pleased to set aside the order of cancellation and allow the petitioner to file his returns on the same terms.
Mr. Bhattacharya, learned advocate appearing for respondent nos. 1 and 2 on the other hand submits that the petitioner had not complied with the statutory provisions and it is for such reason, the registration of the petitioner under the said Act was cancelled.
3
According the respondent authorities the petitioner was given opportunity to show cause. Since, no reply to the show cause was given by the petitioner, the authorities had cancelled the registration. There is no irregularity on the part of the 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 license would be counterproductive and works 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, 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 Bench of this Court in the case of Subhankar Golder (supra), I propose to set aside the order dated 24th August, 2022 cancelling the registration of the petitioner subject to the 4
condition that the petitioner files his returns for the entire period of default and pays requisite amount of tax and interest and fine and penalty, if not already paid.
It is made clear that if the petitioner complies with the directions/conditions noted above, within 4 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 if not already paid.
With the above direction and observations, the writ petition is disposed of without any order as to costs.
All parties to act on the basis of the server copy of this order duly downloaded from this Hon’ble Court’s official website.
Urgent photostat certified copy of this order, if applied for, be made available to the parties upon compliance of necessary formalities.
(Raja Basu Chowdhury, J.) sb.
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.