Rohit Enterprises Through Its Proprietor Changdeo Punjaji Deokar vs. The Commissioner State GST Bhavan And Others
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The petitioner, Rohit Enterprises, a proprietary firm engaged in fabrication work, had its GST registration cancelled by the State Tax Officer (STO) on March 14, 2022, effective from August 21, 2021, due to non-filing of GST returns from August 2021. The petitioner cited financial setbacks due to the pandemic and a personal medical emergency (angioplasty in August 2021) as reasons for the non-filing. The STO had initially suspended the registration on February 28, 2022, and later cancelled it. An application for revocation of cancellation was rejected by the STO on May 17, 2022. The petitioner's appeal against the cancellation order before the Deputy Commissioner (Appeal) was dismissed on October 21, 2022, on grounds of limitation, as it was filed beyond the prescribed period under Section 107 of the MGST Act, 2017.
Held
The Court allowed the writ petition, quashing and setting aside the order suspending GST registration dated February 28, 2022, the order cancelling GST registration dated March 14, 2022, and the appellate order dated October 21, 2022. The Court held that the petitioner's GST registration No. 27AHQPD2485F1Z7 is valid from February 28, 2022, onwards. This is subject to the condition that the petitioner files up-to-date GST returns and deposits all pending dues, including applicable interest, penalty, and late fees, in terms of Rule 23(1) of the MAST Rules, 2017. The Court reasoned that the GST provisions should not be interpreted to deny the right to trade and commerce, which is a constitutional guarantee. The financial hardships caused by the pandemic and the petitioner's medical emergency were considered significant. The Court emphasized that the objective of limitation provisions is to terminate litigation, not to divest a person of their rights. It invoked its jurisdiction under Article 226 to prevent hardship and uphold the constitutional right to livelihood, noting that allowing the petitioner to continue business would also benefit the state by way of revenue. The Supreme Court's decision in Mafatlal Industries Ltd. Vs Union of India was referenced to support the High Court's power to exercise jurisdiction under Article 226 irrespective of statutory limitations.
Key Issues
1. Whether the High Court, in its writ jurisdiction under Article 226 of the Constitution of India, can quash and set aside the order of cancellation of GST registration and the appellate order dismissing the appeal on grounds of limitation, considering the petitioner's circumstances? Petitioner's Arguments: The petitioner argued that due to the pandemic and a personal medical emergency, they were unable to file GST returns. The cancellation of registration would prevent them from carrying on their business, impacting their livelihood and fundamental rights under Articles 19 and 21 of the Constitution. They contended that the appellate authority lacked the power to condone delays beyond 30 days, leaving them remediless. Revenue's Arguments: The revenue supported the impugned orders, stating that the petitioner was given reasonable opportunities before cancellation and for revocation. They argued that the petitioner failed to avail the statutory remedy within the prescribed limitation period and therefore, could not invoke the extraordinary jurisdiction of the High Court under Article 226.
Sections Cited
Section 29(2), Section 107, Section 107(1), Section 107(4), Rule 23(1)
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Cause title — parties, addresses and appearances
JUDGMENT : ( PER S.G. CHAPALGAONKAR, J. )
Rule. Rule is made returnable forthwith. The petition is heard finally, with the consent of the learned counsel for the parties.
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The petitioner approaches this Court under Article 226 of the Constitution of India with following prayers :- (B) That the order passed in Appeal no. DC/APP/E- 001/ABAD/GST/323/2022-2023 Dy. Commissioner (Appeal) Aurangabad may kindly be quashed and set aside. (C) That the order passed by the State Tax Officer dt. 14.3.2022 of cancellation of registration may kindly be quashed and set aside. (D) That, the order dt. 28.2.2022 passed by the State Tax Officer suspending the registration w.e.f. 28.2.2022 may kindly be quashed and set aside. (E) That, the Hon’ble High court may kindly hold that, the petitioner registration no.27AHQPD2485F1Z7 is valid from 28.2.20222 onwards.
The petitioner is a proprietary firm engaged in the business of fabrication work. It is registered under the Central Goods and Services Tax Act, 2017 (GST Act) as well as Maharashtra State Goods and Services Tax Act, 2017. The certificate of registration dated 20-07-2018 has been issued to his firm with registration No. 27AHQPD2485F1Z7. Petitioner contends that since he had undergone angioplasty, and the firm suffered financial set back in pandemic situation, GST returns from August 2021 could not be filed. Section 29(2) of the GST Act enables proper officer to cancel registration if registered person / firm fails to furnish three consecutive returns. The State Tax Officer, Aurangabad issued a show cause notice dated 28-02-2022 calling upon the petitioner to furnish his explanation within a period of 7 working days. The notice stipulated that the registration of the petitioner stood suspended. The petitioner replied the show cause notice on 03-03-2022. Citing the reason of the financial
3 WP-11833-2022-J... crunch, he requested for revocation of the notice. However, the State Tax Officer vide order dated 14-03-2022 cancelled the registration with effect from 21-08-2021. 4. The petitioner requested for revocation of the cancellation of registration. In response, the State Tax Officer issued show cause notice for rejection of the application. The petitioner was called upon to furnish the reply within 7 days along with supporting documents like bank statement till the date of the notice, challan of tax, interest and late filing penalty. The matter was taken up for hearing on 25-04-2022. Finally, the State Tax Officer rejected the application of petitioner seeking revocation of cancellation vide order dated 17-05-2022. 5. The petitioner filed appeal under section 107 of the Maharashtra Goods and Service Tax Act, 2017 challenging cancellation of registration. It was registered as Appeal No. DCST/Appl./E-001/GST-Revocation/2022- 2023/B-619. The Dy. Commissioner/State Tax (Appeal), Aurangabad Division rejected the appeal on the ground of limitation that the appeal has been submitted beyond the prescribed period provided under section 107 (1) and 107 (4) of the MGST Act, 2017. 6. Mr Alok Sharma, learned advocate appearing for the petitioner submits that the petitioner is the vendor of the Bajaj Auto Limited and earns his livelihood through fabrication business. Due to pandemic situation, the business activities of the petitioner were hampered causing huge financial loss. The petitioner was also unwell. In August 2021, he underwent angioplasty. Mr Sharma would further submit that petitioner
4 WP-11833-2022-J... could not submit his GST returns during the relevant period and suffered cancellation of the resignation. He would submit that the petitioner had approached the appellate authority challenging cancellation of the registration. However, his appeal came to be rejected on technical grounds as it was time barred. The appellate authority is not vested with the powers to condone delay of more than 30 days as per section 107 of the GST Act. The petitioner would not be in a position to continue his business in absence of registration and would face starvation. He would urge this Court to exercise juri iction under Art. 226 of the Constitution of India to protect the fundamental right guaranteed under Art. 19 and 21 of the Constitution of India in favour of the petitioner.
Mr A.S. Shinde, learned AGP supports the impugned order. He would submit that the petitioner was given reasonable opportunity before cancellation of the registration. The show cause notice was issued to him on 28-02-2022 along with order of suspension of registration. The petitioner was further given opportunity to furnish the documents while dealing with his application for revocation of cancellation of registration. The petitioner failed to avail the opportunity, consequently suffered the order of rejection of the application for revocation of cancellation of registration. He would further point out that petitioner failed to file appeal within prescribed period of limitation under section 107(4) of the GST Act, 2017. The appellate authority has rightly dismissed the appeal which was apparently barred by limitation. The petitioner has already availed statutory remedy. Hence, he is not entitled to invoke extraordinary juri iction of this Court under Art. 226 of the Constitution of India.
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We have considered the submissions advanced by both the sides. It appears that the petitioner was earning his livelihood through his fabrication business and requires registration under GST Act to run the business. The entire world suffered during the pandemic. The small scale industrialists and service providers like petitioner lost their business for more than two years. The financial losses suffered during this time cannot be ignored particularly when it comes to small scale businesses and service providers. To add apathy to this situation, the petitioner suffered medical emergency. He was required to undergo medical treatment for heart disease and the procedure like angioplasty. The stringent provisions of GST Act took its own course. The petitioner suffered cancellation of registration. Even he lost his appellate remedy because of lapse of limitation. The petitioner has been practically left remediless. He seeks to invoke juri iction of this Court under Art. 226 of the Constitution of India.
In our view, the provisions of GST enactment cannot be interpreted so as to deny right to carry on Trade and Commerce to any citizen and subjects. The constitutional guarantee is unconditional and unequivocal and must be enforced regardless of shortcomings in the scheme of GST enactment. The right to carry on trade or profession cannot be curtailed contrary to the constitutional guarantee under Art. 19(1)(g) and Article 21 of the Constitution of India. If the person like petitioner is not allowed to revive the registration, the state would suffer loss of revenue and the ultimate goal under GST regime will stand defeated. The petitioner
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Applying the aforesaid gidelines to the facts of the present case, we find that the petitioner, who is sufferer of unique circumstances resulting from pandemic and his health barriers, would be put to great hardship for want of GST registration. The petitioner who is small scale entrepreneur cannot carry on production activities in absence of GST registration. Resultantly, his right to livelihood would be affected. Since his statutory appeal suffered dismissal on technical ground, we cannot allow the situation to continue. We find that, in the facts and circumstances of this case it would be appropriate to exercise our juri iction under Art. 226 of the Constitution of India. 14 Even looking to the object of the provisions under GST Act, it is not in the interest of the government to curtail the right of the entrepreneur like petitioner. The petitioner must be allowed to continue business and to contribute to the state’s revenue. The learned advocate for the petitioner has submitted before us that the petitioner is ready and willing to pay all the dues along with penalty and interest as applicable. In the light of the above submission, we are inclined to allow the writ petition as under :- (i) The writ petition is allowed. (ii) The order dated 28-02-2022 suspending the GST registration, the order dated 14-03-2022 cancelling GST registration of the petitioner passed by the State Tax Officer and the order dated 21-10-2022 passed by the Dy. Commissioner of Tax, Aurangabad (Appeal) No.DC/APP/E-001/ABAD/GST/323/2022-2023 are quashed and set aside.
8 WP-11833-2022-J... (iii) We hold and declare that the registration No.27AHQPD2485F1Z7 in the name of the petitioner is valid, from 28-02-2022 onwards subject to the condition that the petitioner files up to date GST returns and deposits entire pending dues along with applicable interest, penalty, late fees in terms of Rule 23 (1) of MAST Rules, 2017. (iv) The Rule is made absolute in above terms. [ S. G. CHAPALGAONKAR, J. ] [ MANGESH S. PATIL, J. ]
mta
Reproduced from the public record of the Bombay High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.