M/S Bhagwati Collection And Handloom vs. The State Of Rajasthan
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The petitioner, M/s Bhagwati Collection And Handloom, filed a writ petition challenging the cancellation of its GST registration by the Jurisdictional Authority via an order dated 03.02.2022. The petitioner contended that it faced financial difficulties during the COVID period, leading to a delay in GST payments. A show cause notice was issued on 01.12.2021, to which the petitioner replied on 01.01.2022. The reply was dismissed, resulting in the cancellation of registration. The petitioner argued this infringes its right to livelihood under Article 21 of the Constitution, noting that no tax or penalty was pending and that returns were still being entertained post-cancellation. The respondents did not object to the restoration of registration, subject to recovery rights.
Held
The Court held that the GST registration of the petitioner deserves to be restored, considering that the failure to file returns occurred during the prevailing COVID-19 pandemic. The Court found the petitioner's explanation for the delay to be acceptable in the context of the pandemic's impact. Consequently, the impugned order dated 03.02.2022, passed by the Jurisdictional Authority, was quashed and set aside. The GST registration of the petitioner was directed to be restored forthwith. The Court also clarified that if any tax dues or other amounts were outstanding against the petitioner, the same could be recovered as per law. The Court did not expressly leave any issue undecided.
Key Issues
1. Whether the cancellation of the petitioner's GST registration, due to financial hardship during the COVID-19 pandemic, is legally sustainable, particularly in light of the petitioner's contention that no tax or penalty was outstanding and that the cancellation infringes the fundamental right to livelihood under Article 21 of the Constitution of India? Petitioner's Arguments: The petitioner argued that the cancellation was unjustified as no tax or penalty was due. They also claimed the cancellation infringed their fundamental right to livelihood. The petitioner relied on the financial difficulties faced during the COVID-19 pandemic as a mitigating factor for the delay in filing returns. They further alleged that the respondents continued to entertain returns even after the cancellation. Respondents' Arguments: The respondents, represented by Mr. Sandeep Bhandawat, did not object to the prayer for restoration of GST registration, provided that the authorities retained the right to effect recoveries of any tax or other dues from the petitioner.
Sections Cited
Article 21
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
Order 03/02/2023 The instant writ petition has been preferred under Article 226 of Constitution of India for assailing the order dated 03.02.2022 whereby, the GST registration of the petitioner was cancelled. Learned counsel Ms. Singhvi representing the petitioner, urged that the petitioner was prevented from making payment of GST on time because of financial crunch faced during the covid period. On this account, the respondents issued a show cause notice dated 01.12.2021 to the petitioner and cancelled its GST registration. The petitioner filed reply dated 01.01.2022 to the show cause notice for cancellation of GST registration, which has been dismissed by the Juri ictional authority vide order dated 03.02.2022. Ms. Singhvi submits that dismissal of the petitioner’s reply against cancellation of registration has resulted into the petitioner not being able to carry on his business and thus, this is (2 of 2) [CW-280/2023] a direct infringement of the fundamental right to earn livelihood as guaranteed by Article 21 of the Constitution of India. The petitioner has alleged that even after cancellation of registration, the respondents have entertained the returns filed by the petitioner. It is also submitted that neither any tax, nor any penalty is pending against the petitioner and thus, there is no justification behind cancellation of GST registration of the petitioner. She thus, urged that the impugned order dated 03.02.2022 passed by the Juri ictional authority deserves to be quashed and set aside and a direction be issued upon the respondents to restore the GST registration of the petitioner. Learned counsel Shri Bhandawat, representing the respondent GST authorities, does not object to the prayer if the GST registration of the petitioner is restored subject to the right of the authorities to effect recoveries of tax, etc. if due against the petitioner. In view of the submissions advanced at bar, we feel that as the failure of the petitioner to file the returns was during the period when Covid Pandemic was prevailing, the GST registration of the petitioner deserves to be restored. As a consequence, the impugned order dated 03.02.2022 passed by the Juri ictional Authority, is quashed and set aside. The GST registration of the petitioner shall be restored forthwith. Needless to say that if any dues of tax, etc. are outstanding against the petitioner, the same may be recovered as per law. The writ petition is allowed in these terms. (Dr. NUPUR BHATI),J (SANDEEP MEHTA),J 17-/Devesh/-
Reproduced from the public record of the Rajasthan High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.