M/S. Central Industrial Security Services vs. The Assistant Commissioner (Circle)

Held

The Court held that no useful purpose would be served by keeping the petitioner out of the Goods and Services Tax regime. It was reasoned that such assessees would continue to do business and supply goods and services, and by not being within the GST fold, they might unfairly not pay GST. The Court emphasized that the ultimate goal of the GST regime, which is to levy and collect tax, would be defeated. The Court found that the petitioner deserved a chance to come back into the GST fold and carry on their trade legitimately. The Court relied on the principles laid down in Tvl.Suguna Cutpiece vs. Appellate Deputy Commissioner (ST) (GST) and others. The Court directed the petitioner to file all pending returns, pay defaulted tax along with interest and penalties within 45 days, and specified that such payments could not be made from Input Tax Credit. Future tax liability was to be paid in cash. The Court also directed the respondents to take steps to revive the registration within 30 days of receiving the order.

Facts

The petitioner, M/s.Central Industrial Security Services, a partnership firm, had its GST registration (No.33AAFFC9370E2ZK) cancelled by the respondent, The Assistant Commissioner (Circle), with effect from 03.09.2022. The petitioner contended that they were regular in filing returns and paying GST, but their part-time accountant failed to file returns for over six months, leading to the cancellation. Upon learning of the cancellation in February 2023, they were unable to claim Input Tax Credit. The petitioner approached the High Court seeking to quash the cancellation order and direct the respondent to revoke it, as the respondent was unwilling to restore the registration.

Key Issues

1. Whether the cancellation of GST registration for non-filing of returns for over six months, despite the petitioner's claim of reliance on a part-time accountant, is legally sustainable, particularly in light of the principles of natural justice and the constitutional right to carry on trade, as enshrined in Article 19(1)(g) of the Constitution of India? Petitioner's arguments: 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 assessees should be allowed to revive their registration. They also contended that denying them the right to carry on trade would violate their constitutional rights. Respondent's arguments: The learned counsel for the respondent admitted that the judgment in Tvl.Suguna Cutpiece was being followed in similar matters.