Syed Abdul Khader Shajrey Ielahi vs. The Assistant Commissioner

Held

The Court held that no useful purpose would be served by keeping the petitioner out of the Goods and Services Tax regime, as they would continue to do business and supply goods and services. The Court found that adequate safeguards exist under the GST enactments which can be applied to prevent abuse and deter defaults. By not allowing the petitioner to revive their registration, an unintended privilege might be conferred upon them to not pay GST on supplies, thus defeating the ultimate goal of the GST regime. The Court reiterated that the intention of the GST enactments is to facilitate, not debar, assesses from coming back into the GST fold. Exercising its power under Article 226 of the Constitution, the Court quashed the impugned order of cancellation and directed the respondent to revive the petitioner's GST registration, subject to certain conditions. These conditions included filing pending returns, paying defaulted tax with interest and penalties, and ensuring that Input Tax Credit is not utilized until scrutinized and approved by a competent officer. The respondent was also directed to take steps to enable the petitioner to file returns and pay dues on the GST portal.

Facts

The petitioner, Syed Abdul Khader Shajrey Ielahi, proprietor of M/s. Alif Traders, sought to quash an order dated 23.09.2022 by the Assistant Commissioner, West Veli Street Assessment Circle, Madurai, which cancelled the petitioner's GST registration (No. 33CQKPS1526H2ZR). The petitioner, engaged in the business of scrap clothes, had been regular in filing returns and paying GST. However, due to an accident in 2021 and subsequent treatment, business operations ceased for several months. The petitioner's part-time accountant failed to file GST returns for over six months, leading to the cancellation. Upon attempting to resume business, the petitioner discovered the cancellation and was unable to claim Input Tax Credit. The respondent authority was reportedly unwilling to restore the registration, prompting the petitioner to approach the High Court.

Key Issues

1. Whether the cancellation of the petitioner's GST registration by the respondent authority was illegal, arbitrary, and liable to be quashed under Article 226 of the Constitution of India, considering the petitioner's circumstances and the intent of the GST regime? The petitioner argued that no useful purpose would be served by keeping them out of the GST regime, as they would continue to do business and supply goods/services. They relied on the decision in Tvl. Suguna Cutpiece vs. Appellate Deputy Commissioner (ST) (GST) and others, which held that persons should be allowed to revive their registration and integrate back into the mainstream, as safeguards exist under GST enactments to prevent abuse and deter defaults. The petitioner contended that denying registration would unfairly confer a privilege of not paying GST and defeat the ultimate goal of the GST regime. The respondent admitted that the judgment in Tvl. Suguna Cutpiece was being followed in similar matters.