M/S Cigfil Retail PVT LTD vs. Union Of INDIA And Ors.

Held

The Court held that the cancellation of the petitioner's GST registration was based on hyper-technical grounds and that the authorities had not properly considered the petitioner's explanations and rectifications. The Court found that the issue with the sub-let agreement was a minor defect that was rectified by a supplementary agreement, and this rectification was not adequately considered. Regarding the non-existence of business, the Court acknowledged the petitioner's explanation of operating from alternative locations due to Covid-19 protocols and the fact that taxes were paid to the State during that period. The Court was inclined to set aside the order rejecting the revocation and the appellate order. The Court directed the State respondent to reconsider the petitioner's case for revocation of cancellation, emphasizing a fresh consideration in light of the judgment in International Value Retail Private Limited and the observations made in this order. The respondent was directed to conduct a physical inspection of the premises after giving notice to the petitioner, allow the petitioner to submit all documents, verify the existence and business activity from the premises, and take a final decision without adopting a hyper-technical view, passing a reasoned and speaking order after providing an opportunity of hearing.

Facts

The petitioner, M/s. CIGFIL Retail Pvt. Ltd., challenged an order dated February 8, 2021, cancelling its GST registration under Section 29(2) of the State GST Act. The cancellation was based on allegations that the registration was obtained using void documents and that the business did not exist at the declared place. The petitioner also challenged an order dated April 16, 2021, rejecting its application for revocation of cancellation, and a subsequent appellate order dated August 25, 2021. The petitioner argued that the cancellation was on technical grounds related to a minor defect in a sub-let agreement, which was later rectified by a supplementary agreement. Regarding the non-existence of business, the petitioner stated that due to Covid-19 protocols, business was conducted from other locations, but taxes were paid to the State during that period.

Key Issues

1. Whether the cancellation of GST registration on the ground of a minor defect in the sub-let agreement, which was subsequently rectified by a supplementary agreement, is sustainable in law, particularly when the petitioner has been paying taxes to the State? 2. Whether the cancellation of GST registration for alleged non-existence of business at the declared premises is justified, considering the petitioner's explanation of conducting business from alternative locations due to Covid-19 protocols and continued payment of taxes? Petitioner's Arguments: The petitioner contended that the cancellation was based on hyper-technical grounds. They argued that the defect in the rent agreement was minor and rectified by a supplementary agreement, which was not considered. They further submitted that during the Covid-19 pandemic, business operations were shifted to other locations to comply with protocols, but taxes were consistently paid to the State. The petitioner relied on the decision in WPA 11147 of 2020 (International Value Retail Private Limited Vs. Union of India & Ors.). Revenue/State's Arguments: The judgment records no specific arguments from the Union of India or the State respondents.