M/S. Darshan Cotton Industries vs. The Superintendent Of Central Tax

Facts

The petitioner, M/s. Darshan Cotton Industries, filed a writ petition challenging the order for suspension of its GST registration certificate, issued via a show-cause notice dated March 2, 2023, by the Superintendent of Central Tax. This suspension was a consequence of an Order-in-Original dated September 25, 2019, which imposed a penalty for not timely paying GST. The petitioner had previously challenged this Order-in-Original in a separate writ petition (W.P.No.30428 of 2023). This Bench had disposed of that earlier petition on November 9, 2023, reserving the petitioner's right to challenge the Order-in-Original by preferring an appeal, if permitted by rules and regulations.

Held

The High Court held that it would be difficult to entertain the writ petition challenging the show-cause notice for suspension of registration at this juncture, given that the underlying Order-in-Original was still under challenge by the petitioner. The Court noted that in a previous writ petition (W.P.No.30428 of 2023), the petitioner's right to prefer an appeal against the Order-in-Original was reserved. The Court reasoned that if the petitioner avails the remedy of appeal and complies with the requirement of paying 10% of the disputed amount, the consequential steps taken by the department, including the suspension of registration, might automatically lose their efficacy. Therefore, the Court was not inclined to entertain the writ petition at that stage and permitted the petitioner to take appropriate recourse as available under law.

Key Issues

1. Whether the High Court should entertain a writ petition challenging the suspension of a GST registration certificate when the underlying Order-in-Original imposing a penalty for non-payment of GST is itself under challenge by way of a separate writ petition, with the petitioner having the option to file an appeal. Petitioner's contention: The petitioner argued that the action of the first respondent in suspending the registration certificate was arbitrary, contrary to the GST Act, violated Article 19(2) of the Constitution, and breached the principles of natural justice, as it was done without granting a sufficient opportunity of being heard. They sought to set aside the show-cause notice and direct the revocation of their registration. Revenue's contention: The respondents argued that since the petitioner had the option to prefer an appeal against the Order-in-Original, and had availed that option in a previous writ petition, the current writ petition challenging the consequential suspension of registration was not maintainable at this juncture. They contended that if the petitioner pursued the appeal and paid the requisite 10% of the disputed amount, the consequential steps taken by the department might automatically lose their efficacy.