Ethiraj Catering Service vs. The Commissioner Of Commercial Taxes

Held

The Court allowed the writ petition and set aside the impugned order dated 01.03.2023. The Court reasoned that the petitioner, an elderly individual in the catering business for over 40 years, faced significant hardship due to illness and reliance on an inadequately informed private accountant. The cancellation of GST registration was equated to a "capital punishment" for traders, severely impacting their ability to conduct business, pay staff, and meet financial obligations, potentially ruining their long-established enterprises. The Court noted that the statutory appeal failed on a technicality, leaving the petitioner remediless. Citing its own previous order in W.P(MD).No.8086 of 2023 and the principles discussed in the Bombay High Court judgment, the Court emphasized that the objective of the GST regime should be to promote trade, not curtail it, and that constitutional guarantees to carry on trade and commerce should be upheld. The Court directed the respondents to provide an opportunity to the petitioner to restore their registration within six weeks from the date of receiving the order. The Court also expressed a broader concern about the department's methods, suggesting the need for simpler communication, including SMS and regional language notices, for uneducated traders.

Facts

The petitioner, Tvl.Ethiraj Catering Service, represented by its proprietor, filed a writ petition challenging an order dated 01.03.2023 passed by the Assistant Commissioner(ST) cancelling its GST registration. The petitioner, engaged in catering services for over four decades, failed to file monthly returns for the second half of 2022 due to illness. The cancellation order was issued by the second respondent. The petitioner discovered the cancellation when attempting to file a subsequent return. The petitioner's statutory appeal before the Deputy Commissioner was rejected on the technical ground of not filing a hard copy of the impugned order, as required by Section 108(1) of the Central Goods and Service Tax Act. The petitioner argued that their private accountant, who assisted with GST filings, was not well-versed in the Act and procedures, leading to this technical lapse.

Key Issues

1. Whether the cancellation of GST registration for non-filing of returns, due to the proprietor's illness and the alleged lack of understanding of online procedures by their accountant, warrants intervention under Article 226 of the Constitution of India, particularly when the statutory appeal was rejected on a technicality? (Mixed question of law and fact, concerning the interpretation and application of GST provisions and principles of natural justice). Petitioner's arguments: The petitioner contended that they are not well-versed with online processes, being a small-scale entrepreneur with limited education, and relied on a private accountant who was not adequately knowledgeable about GST procedures. The cancellation of registration has brought their business to a standstill, affecting their livelihood and reputation built over four decades. They relied on a previous order of the same High Court in W.P(MD).No.8086 of 2023, which in turn referred to a Bombay High Court judgment, emphasizing the constitutional right to carry on trade and commerce under Article 19(1)(g) and Article 21, and the need for a chance to revive registration, especially when statutory appeals fail on technical grounds. Revenue's arguments: The respondents argued that notices were issued as per Section 169 of the Act, through the common portal, and since the petitioner filed returns through the portal, they cannot claim ignorance of portal-based notices. They asserted that the impugned order was correctly passed after issuing a show cause notice.