Abdul Nayim Chowdhury vs. Joint Commissioner Of State Tax And Ors.

Facts

The petitioner, Abdul Nayim Chowdhury, filed a writ petition challenging the order dated January 19, 2023, passed by the Joint Commissioner of State Tax, Barasat Charge, cancelling his GST registration. The cancellation was based on the petitioner's failure to file returns for a continuous period of six months, following a show cause notice issued on January 6, 2023. The petitioner contended that due to unforeseen circumstances, he could not respond to the show cause notice or apply for revocation of the cancellation, and that he was unaware of these proceedings. He expressed his willingness to comply with the GST provisions, file all pending returns, and pay any outstanding tax, interest, penalty, and fine.

Held

The Court held that the petitioner should be granted an opportunity to continue his business. It found that the petitioner had made out a case of being prevented by sufficient cause from responding to the show cause notice and from filing a revocation application. The Court reasoned that suspending or revoking the registration of a small businessman, especially when tax evasion is not alleged, would be counterproductive and detrimental to revenue collection, as it would prevent the petitioner from raising invoices and thus impact tax recovery. The Court was guided by a Division Bench decision in Subhankar Golder v. Assistant Commissioner of State Tax, Serampore Charge & Ors. (MAT 639 of 2024). The Court set aside the order dated January 19, 2023, cancelling the petitioner's registration, subject to the petitioner filing all pending returns and paying all requisite tax, interest, fine, and penalty within four weeks of receiving the order. The jurisdictional officer was directed to restore the registration upon compliance. The respondents were directed to activate the portal within one week for the petitioner to file returns and make payments. Failure to comply would result in the writ petition being automatically dismissed.

Key Issues

1. Whether the petitioner, a small businessman, should be granted an opportunity to have his GST registration restored, given his claim of being prevented by sufficient cause from responding to the show cause notice and from filing a revocation application? (Mixed question of law and fact, turning on the interpretation and application of principles of natural justice and the relevant provisions of the Central/West Bengal Goods and Services Tax Act, 2017 concerning cancellation of registration and revocation). Petitioner's arguments: The petitioner argued that he was interested in complying with the Act but was prevented by unforeseen circumstances. He claimed lack of knowledge of the show cause notice and cancellation order. He sought an opportunity to file returns and undertake to pay all arrears, interest, penalty, and fine. The petitioner relied on the principle that a small businessman should be given a chance to continue his business, especially when tax evasion is not alleged. Revenue's arguments: The State-respondents did not file an affidavit-in-opposition. The judgment notes that the allegations in the writ petition are deemed not to have been admitted by the respondents. No specific arguments were recorded for the State-respondents.