Case Title | M/S World Steel Tech (India) Pvt. Ltd. Vs State Of Gujarat |
Court | Ahmedabad High court |
Honorable judges | Justice Sonia Gokani Justice Mauna M. Bhatt |
Citation | 2022 (12) GSTPanacea 542 HC Ahmedabad R/SPECIAL CIVIL APPLICATION NO. 20034 of 2022 |
Judgement Date | 01-December -2022 |
The summary of the case revolves around a petition filed under Article 226 of the Constitution of India, which seeks various directions regarding the cancellation of registration and related orders. Ms. Pooja Ashar, representing the respondents, has waived the service of notice of the rule on behalf of all respondents, and with the consent of the parties, the petition is taken up for final hearing.
The petition specifically aims to quash and set aside three main documents: a show cause notice dated 23rd February 2022, an order dated 8th March 2022, which canceled the petitioner’s registration, and an appeal order dated 7th September 2022, which rejected the petitioner’s appeal citing limitation issues.
The case revolves around a petition filed under Article 226 of the Indian Constitution seeking the annulment of a show cause notice, an order revoking the petitioner’s registration, and an appeal order dismissing the petitioner’s appeal due to a purported delay. Ms. Pooja Ashar, representing all respondents, waived service of notice for the rule, and with the consent of the parties, the petition is set for final hearing.
The petitioner, a manufacturing unit producing M.S. Billets, procures raw materials like sponge iron and steel scraps from Gujarat-based firms and sells the finished goods to various buyers. These transactions fall under the ambit of ‘supply’ as per the Goods and Services Tax Act, 2017 (GST Act). The petitioner duly registered under the GST Act and maintained records of transactions, filing returns as required.
Until August 2021, the petitioner complied with GST procedures, filing FORM GSTR 1 for outward supplies and FORM GSTR 3B for tax details. However, due to the financial strain caused by the Covid-19 pandemic, the petitioner faced a severe crisis and couldn’t file returns from August 2021 to January 2022, spanning six consecutive months. The petitioner contends that this period of non-filing was due to pandemic-related hardships.
The petitioner asserts that despite the lapse in filing, they made efforts to comply but faced challenges due to lack of personnel or resources. Despite this, the tax authorities issued a show cause notice, cancelled the petitioner’s registration, and rejected their appeal citing delay. The petitioner challenges these actions, arguing that the circumstances warrant leniency due to the unprecedented challenges posed by the pandemic.
The petitioner seeks the court’s intervention to quash the show cause notice, revoke the cancellation of registration, and overturn the appeal dismissal. They argue that their non-compliance stemmed from extenuating circumstances beyond their control and that penalizing them disproportionately would be unjust.
The case presents a complex interplay between regulatory compliance, economic adversity, and the legal ramifications thereof. The court’s decision will likely hinge on balancing the imperative of tax compliance with the recognition of genuine hardships faced by businesses during extraordinary times like the Covid-19 pandemic.
The case revolves around a petition filed under Article 226 of the Constitution of India, seeking to quash a show cause notice, an order cancelling registration, and an appeal rejection order. The petitioner, a manufacturing unit of M.S. Billets, operated within the terms of the Goods and Services Tax Act, 2017 (GST Act), purchasing raw materials and selling manufactured goods. They maintained proper records and complied with tax laws until August 2021. Due to the financial crisis caused by the Covid-19 pandemic and a lack of expertise in GST procedures, they failed to file returns from August 2021 to January 2022.
Subsequently, a show cause notice was issued proposing cancellation of registration, citing the failure to file returns. Despite the notice providing an opportunity to respond, the petitioner neither replied nor attended the hearing, as their staff had left and directors were focused on reviving the business. Consequently, their registration was cancelled, effective from August 1, 2021. The petitioner did not seek revocation but later appealed the cancellation, which was rejected due to being 63 days overdue.
The petitioner argues that the cancellation was unjustified given the pandemic-induced financial crisis and lack of expertise in GST procedures, which hindered compliance. They seek relief from the cancellation and reinstatement of their registration. The court will consider these arguments in the final hearing.
The case involves a petition filed under Article 226 of the Constitution of India seeking directions to quash a show cause notice dated 23.2.2022, an order dated 8.3.2022 canceling the petitioner’s registration, and an appeal order dated 7.9.2022 rejecting the petitioner’s appeal due to delay. The petitioner, a manufacturing unit of M.S. Billets, operated within the GST Act’s provisions, purchasing raw materials and selling finished goods. However, due to financial crisis exacerbated by the COVID-19 pandemic, the petitioner failed to file returns from August 2021 to January 2022, resulting in a show cause notice for registration cancellation.
Despite the opportunity to respond, the petitioner failed to do so, leading to the cancellation of registration on 8.3.2022. Subsequently, the petitioner’s appeal was rejected due to a 63-day delay. The petitioner now challenges these actions as illegal and violating principles of natural justice.
During the hearing, the petitioner’s advocate argued that the show cause notice and cancellation order were erroneous and violated procedural fairness. He pointed out discrepancies in the process, such as the mention of a purported reply in the cancellation order despite none being filed. He cited legal precedent to support the argument that deviating from prescribed procedures constitutes a breach of statutory provisions.
The respondents appeared and filed an affidavit-in-reply, contesting the petitioner’s claims.
The court is now tasked with considering the arguments presented by both parties and determining whether the actions of the respondents were indeed illegal and in violation of procedural fairness.
The case revolves around a petition filed under Article 226 of the Constitution of India seeking the annulment of a show cause notice, an order cancelling the petitioner’s registration, and an appeal order rejecting the petitioner’s appeal due to a supposed limitation issue.
The petitioner, a manufacturing unit of M.S. Billets, faced financial distress due to the COVID-19 pandemic, leading to its inability to file tax returns for six consecutive months from August 2021 to January 2022. Consequently, a show cause notice proposing the cancellation of registration was issued to the petitioner in February 2022. Despite being provided with an opportunity to respond, the petitioner failed to do so due to staff shortages and management focusing on business revival. Consequently, the registration was cancelled effective from August 2021.
The petitioner did not seek revocation of the cancellation but filed a belated appeal, which was rejected due to exceeding the statutory period by 63 days. The petitioner contends that the cancellation orders are illegal, citing procedural irregularities and a lack of adherence to principles of natural justice. They argue that their dire financial situation prevented them from following the prescribed procedure, citing legal precedents in support of their arguments.
On the other hand, the respondent argues that the petitioner’s failure to file returns for over six months justifies the cancellation of registration. They cite legal precedents to support the decision of the appellate authority regarding the limitation issue.
During the proceedings, the petitioner expresses readiness to comply with the provisions of the law.
After considering arguments from both parties, the court acknowledges the petitioner’s failure to file returns as per the GST Act but notes the petitioner’s willingness to comply. The court must now weigh the legal arguments and precedents presented before making a decision.
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