Sri Maruthi Stone Crusher vs. The Assistant Commissioner Of Commercial Taxes

Facts

The petitioner, Sri Maruthi Stone Crusher, a partnership firm, filed a writ petition challenging the order dated 24.05.2025 passed by the Assistant Commissioner of Commercial Taxes, cancelling its GST registration. The cancellation was based on the petitioner's failure to file a reply to a Show Cause Notice dated 16.04.2025. The respondent cancelled the registration because the petitioner had not filed statutory returns for six months. The petitioner claimed that its failure to file returns was due to severe financial distress and a halt in business operations, not willful intent. They expressed a desire to revive their business and comply with GST laws.

Held

The Court allowed the petition in part and quashed the impugned order dated 24.05.2025 cancelling the petitioner's GST registration. The Court reasoned that while the petitioner failed to file returns for six months and did not respond to the Show Cause Notice, this was attributed to financial hardship rather than willful intent. The Court was persuaded by the petitioner's willingness to regularize all pending statutory compliances, including filing returns and offering penalty and interest. The Court granted liberty to the petitioner to file all returns and offer penalty and interest in response to the Show Cause Notice within one week of receiving a certified copy of the order. The respondent was directed to consider the response and pass appropriate orders within three weeks of its receipt. The issue of whether the petitioner had taken adequate measures to inform authorities about business discontinuance was implicitly addressed by the Court's decision to grant an opportunity to regularize.

Key Issues

1. Whether the cancellation of GST registration under Section 29(2)(e) of the CGST Act, 2017, is justified when the failure to file returns was due to financial hardship and not willful? Petitioner's arguments: The petitioner contended that the non-filing of GST returns was not deliberate but a consequence of severe financial distress and a complete halt in business operations due to weak market demand. They stated their intention to revive the business and regularize all pending statutory compliances, including filing returns and paying applicable dues, if given another opportunity. They relied on the circumstances detailed in paragraphs 9 and 10 of their writ petition. Respondent's arguments: The respondent, through the High Court Government Pleader, argued that despite the petitioner's constraints, they ought to have taken measures to inform the authorities about the discontinuance of business. However, the respondent also acknowledged the petitioner's submission that they had received work orders for business revival and were willing to file all pending returns, offering penalty and interest.