M/S. Aditya Traders vs. State Of Uttar Pradesh And Another
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The petitioner, M/s. Aditya Traders, a proprietorship engaged in trading and service provision for BSNL, filed a writ petition seeking restoration of its GST registration and permission to deposit tax liability from November 2024 onwards. The petitioner had been regularly paying taxes until October 2024. The firm's GST registration was cancelled on November 18, 2024, based on an online application for cancellation. The petitioner claims this application was made without their knowledge due to mischief by an employee who had left their service. Upon discovering the cancellation, the petitioner applied for restoration on November 28, 2024, but no action was taken by the respondents. The cancellation prevented the petitioner from depositing tax, leading BSNL to stop their operations.
Held
The Court allowed the writ petition. While acknowledging that the respondents acted correctly in cancelling the registration based on the online application, the Court found the petitioner's plea of mischief to be genuine. The Court noted that the petitioner had consistently paid taxes until October 2024, was continuing in business, and immediately applied for restoration upon learning of the cancellation. The Court reasoned that for mischief played by someone, which led to the department acting in accordance with the law, the petitioner should not be left without a remedy. Regarding the respondents' argument about the system not allowing restoration, the Court stated that while the department's hands might be tied by the system, the Court was not powerless in peculiar circumstances. Consequently, the cancellation of the petitioner's registration was quashed and set aside. The respondents were directed to restore the petitioner's registration and permit them to deposit tax from November 2024 onwards within three weeks.
Key Issues
1. Whether the cancellation of the petitioner's GST registration, based on an online application, was valid, considering the petitioner's claim that the application was made fraudulently. This issue turns on the interpretation and application of principles of natural justice and the potential for relief in cases of alleged mischief impacting statutory compliance. Petitioner's Arguments: The petitioner contended that they were victims of mischief, as they never applied for cancellation of their registration. The cancellation has severely impacted their business operations, preventing them from depositing tax. They argued that despite their prompt application for restoration, the respondents failed to act. Respondent's Arguments: The respondents argued that the cancellation was based on an online application received through the portal, and their action was in accordance with the system. They further submitted that the system does not provide for the restoration of a voluntarily cancelled registration, and therefore, the petition should be dismissed.
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Neutral Citation No. - 2025:AHC:35142-DB Chief Justice's Court Case :- WRIT TAX No. - 667 of 2025 Petitioner :- M/S. Aditya Traders Respondent :- State of Uttar Pradesh and another Counsel for Petitioner :- Akshay Raghuvanshi, Pulkit Srivastava, Shivendra Singh Counsel for Respondent :- Ankur Agarwal (SC) Hon'ble Arun Bhansali,Chief Justice Hon'ble Kshitij Shailendra,J.
This writ petition has been filed by the petitioner seeking restoration of GST registration of the petitioner firm and permission to deposit the tax liability since the month of November, 2024 onwards.
It is inter alia indicated in the petition that the petitioner firm is a proprietorship of one Aditya Gupta, who is engaged in the business of Trading and Service provider of Bharat Sanchar Nigam Limited in district Basti. The petitioner has been regularly paying tax liability by submitting all the required documents and had paid the tax till October, 2024. 3. Submissions have been made that the work pertaining to filing of returns and deposit of tax was being looked after by an employee of the petitioner firm, since October, 2024, he is not in service. Submissions have also been made that the petitioner received a communication dated 18.11.2024 from the respondents regarding cancellation of registration of the petitioner firm (Annexure-3). The communication indicated that on an application made with regard to seeking cancellation of registration, registration has been cancelled. The petitioner immediately approached the office of the Assistant Commissioner and filed the application dated 28.11.2024 seeking restoration of the registration
so that he can deposit the tax liability for the month of November, 2024. It is submitted that despite making of the application, no steps have been taken by the respondents.
Learned counsel for the petitioner made submissions that the petitioner apparently is a victim of some mischief played by someone and application seeking cancellation of registration has been made inasmuch as there was no occasion for the petitioner to make an application seeking cancellation of registration. The result of cancellation is that the petitioner is not in a position to deposit the requisite tax and in absence of proof of deposit of tax, BSNL is stopping the petitioner from functioning and pressing hard for deposit of tax liability.
Based on the said submissions, it is prayed that the registration may be restored and the petitioner may be permitted to deposit tax from November, 2024 onwards.
Instructions have been produced by the respondents inter alia indicating that online application was received seeking cancellation of the registration based on which the registration has been cancelled and on an application made by the petitioner seeking restoration, no action can be taken as the system does not envisage any restoration of the cancelled registration and, therefore, the petition deserves dismissal.
We have heard learned counsel for the parties and have perused the material available on record.
Undisputedly, the cancellation of registration has taken place based on an application made at the portal in relation to the registration number of the petitioner whereby application seeking cancellation of registration has been made on-line. The action of the respondents in acting on the said application cannot be faulted.
However, it is the case of the petitioner that on account of some mischief played by someone, the application seeking cancellation of registration on-line has been made, which plea apparently appears to be genuine inasmuch as immediately on coming to know of the same, the petitioner moved application seeking restoration, the respondents have not indicated anything in the instructions regarding any mala fide involved, entire tax till October, 2024 already stands deposited and the petitioner continues to be in business and for continuing with the business, he is required to deposit the tax in time and, therefore for some mischief played by someone, on which even if the department has acted in accordance with law, petitioner cannot be rendered remedy less qua the said action.
So far as the plea raised on behalf of the respondents regarding the system not providing for restoration of a cancelled registration applied voluntarily is concerned, the hands of the department may be tied but in peculiar circumstances of the present case, the Court is not powerless.
Consequently, the petition is allowed.
The cancellation of petitioner's registration by a communication dated 18.11.2024 (Annexure-3) is quashed and set aside. The respondents are directed to restore the registration of the petitioner and permit him to deposit the tax for the period of November, 2024 onwards in accordance with law. Needful may be done by the respondents within a period of three weeks. Order Date :- 10.3.2025 RK (Kshitij Shailendra, J) (Arun Bhansali, CJ) RAJESH KUMAR High Court of Judicature at Allahabad
Reproduced from the public record of the Allahabad High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.