M/S. R.A. Enterprises vs. The Deputy Commissioner (St)

Held

The Court held that no useful purpose would be served by keeping the petitioner out of the Goods and Services Tax regime. The Court reasoned that assessees would continue to do business and supply goods/services, and by not being within the GST fold, they might unfairly avoid paying GST. This defeats the ultimate goal of the GST regime. The Court found that adequate safeguards exist under the GST enactments to deter defaults. Therefore, the Court exercised its power under Article 226 of the Constitution of India in favour of the petitioner. The impugned order of cancellation was quashed, and the petitioner was granted consequential relief, subject to certain conditions. The conditions included filing all pending returns, paying defaulted tax with interest and penalties, and ensuring that Input Tax Credit is not utilized for such payments. The registration was to be revived forthwith upon compliance. The respondents were also directed to take steps to enable the petitioner to file returns and pay dues on the GST portal.

Facts

The petitioner, R.A. Enterprises, represented by its proprietor, sought a writ of certiorarified mandamus to quash an order dated 07.03.2022 passed by the Assistant Commissioner (ST), Tuticorin II Assessment Circle, cancelling its GST registration (GSTIN: 33AFTPV7837E1ZT). The cancellation was based on the petitioner's failure to file GSTR-3B returns for six consecutive months, as per Section 29(2)(c) of the Tamil Nadu Goods and Services Tax Act, 2017. The petitioner attributed this non-compliance to a shortage of funds resulting from delayed payments from main contractors. A representation made to the Appellate Authority on 13.08.2022 yielded no result, leading to the present writ petition.

Key Issues

1. Whether the cancellation of GST registration for non-filing of returns, despite the underlying financial difficulties of the petitioner, violates the principles of natural justice and the constitutional right to carry on trade or business under Article 19(1)(g)? Petitioner's argument: The petitioner contended that the cancellation of registration served no useful purpose, as they would continue to conduct business and supply goods/services, potentially without paying GST. They relied on the decision in Tvl. Suguna Cutpiece vs. Appellate Deputy Commissioner (ST) (GST) and others, which held that reviving registration is beneficial for both the assessee and the government, ensuring tax collection and integration into the GST fold. They argued that denying registration infringes upon their fundamental right to trade and profession, which can only be subjected to reasonable restrictions. Revenue's argument: The judgment does not record any specific arguments made by the respondents (revenue).