Case tittle
| Pandarakandiyil Moideenkutty VS Superintendent of Central Tax and Central Excise |
Court | Kerala High Court |
Honourable Judge | Justice Gopinath P. |
Citation | 2022 (07) GSTPanacea 710 HC Kerala Wp(C) No. 19904 Of 2022 |
Judgment Date | 06-July-2022 |
The petitioner is a proprietor involved in executing works contracts and had secured a registration under both the Central Goods and Services Tax (CGST) Act, 2017, and the Kerala State Goods and Services Tax Act, 2017. This registration was canceled on February 2, 2021, due to the petitioner’s failure to file required returns. According to Section 30 of the CGST Act, 2017, the petitioner had a 30-day window from the date of cancellation to apply for the revocation of the registration. This period could be extended by the Joint Commissioner for an additional 30 days.
Despite these provisions, the petitioner did not submit an application for the revocation of the registration within the stipulated time frame. Eventually, on November 20, 2021, the petitioner lodged an appeal under Section 107 of the CGST Act, contesting the cancellation order before the Appellate Authority. This appeal was subsequently rejected on March 9, 2022, as documented in Ext.P5.
The case highlights the procedural timelines and the consequences of non-compliance with statutory requirements under the CGST Act, as well as the steps taken by the petitioner in seeking redressal through the appellate process.
The petitioner is the proprietor of a business engaged in the execution of works contracts. He had obtained registration under the Central Goods and Services Tax Act, 2017 (CGST Act) and the Kerala State Goods and Services Tax Act, 2017 (KGST Act). However, his registration was canceled on February 2, 2021, due to the non-filing of returns.
According to Section 30 of the CGST Act, 2017, the petitioner had 30 days from February 2, 2021, to apply for the revocation of his registration. This 30-day period could be extended by the Joint Commissioner for an additional 30 days. Despite this provision, the petitioner did not file any application for the revocation of his registration within the stipulated time frame.
Eventually, the petitioner filed an appeal under Section 107 of the CGST Act before the Appellate Authority on November 20, 2021, challenging the cancellation order. This appeal was ultimately rejected by the Appellate Authority on March 9, 2022, as documented in Exhibit P5.
The petitioner’s counsel raised several arguments in the case, including referencing a decision by the Hon’ble High Court of Madras in W.P.(C.). No.25048 of 2021 and related cases. This decision by the High Court of Madras is pertinent to the petitioner’s case, as it addresses similar legal issues surrounding the cancellation and revocation of GST registration.
The petitioner is the proprietor of a business involved in executing works contracts and was registered under both the Central Goods and Services Tax Act and the Kerala State Goods and Services Tax Act of 2017. However, this registration was cancelled on February 2, 2021, due to the non-filing of returns. According to Section 30 of the CGST Act, 2017, the petitioner had 30 days from the date of cancellation to apply for the revocation of registration, with a potential extension of another 30 days granted by the Joint Commissioner. Despite this, the petitioner did not submit an application for revocation within the given time frame.
Eventually, on November 20, 2021, the petitioner filed an appeal under Section 107 of the CGST Act before the Appellate Authority, contesting the cancellation of the registration. This appeal was dismissed by order Ext.P5 on March 9, 2022.
The petitioner’s counsel raised multiple arguments, including referencing a judgment from the Hon’ble High Court of Madras in W.P.(C.) No. 25048 of 2021 and related cases. In this judgment, the Court noted that those who failed to utilize the amnesty scheme to revive their registration should still be granted relief. The Court emphasized that the provisions of the GST enactments should not be interpreted to deny a citizen’s right to carry on trade and commerce, which is constitutionally guaranteed under Articles 14, 19(1)(g), and 21 of the Constitution of India. The Court further held that while quasi-judicial officers must adhere to the provisions and limitations of the Act, they cannot ignore these restrictions. Nonetheless, the Court deemed it appropriate to exercise its power under Article 226 of the Constitution to quash the impugned orders and provide relief to the petitioners. This would align with the objective of the GST enactment to levy and collect fair tax from all assessees. The Court stressed that legitimate trade and commerce should be allowed to proceed, provided there is compliance with tax and statutory obligations.
The Court concluded that the petitioners should be given an opportunity to revive their registration and rectify their defaults. It suggested that authorities might impose penalties based on the severity of the lapses, and recommended that the Central and State Governments consider amending the Rules to levy penalties as a deterrent against casual compliance.
The petitioner’s counsel argued that if the cancellation of the petitioner’s registration is not revoked, it would cause significant prejudice and hardship to the petitioner. The petitioner’s inability to revive the registration would adversely impact their ability to carry on their business activities.
The petitioner is the proprietor of a business engaged in executing works contracts, holding a registration under both the Central Goods and Services Tax (CGST) Act and the Kerala State Goods and Services Tax (KSGST) Act of 2017. This registration was canceled on February 2, 2021, due to non-filing of returns. According to Section 30 of the CGST Act, 2017, the petitioner had a 30-day window to apply for revocation of this cancellation, with the possibility of a further 30-day extension granted by the Joint Commissioner. However, the petitioner did not file for revocation within this period.
Subsequently, on November 20, 2021, the petitioner filed an appeal under Section 107 of the CGST Act, challenging the cancellation of registration. This appeal was rejected on March 9, 2022, as per Ext.P5.
The petitioner’s counsel raised several contentions, including a reference to a decision by the Madras High Court in W.P.(C.) No.25048 of 2021 and related cases. The Madras High Court had quashed similar cancellation orders and provided consequential relief, emphasizing that the provisions of the GST enactments should not be interpreted to deny the right to carry on trade and commerce. It was argued that such a denial would violate constitutional rights under Article 14, Article 19(1)(g), and Article 21 of the Indian Constitution. The Court had also highlighted that quasi-judicial authorities must act within the limitations prescribed by the Act and that the petitioners should be given a chance to regularize their defaults, potentially facing penalties for their lapses.
The petitioner’s counsel argued that the cancellation of registration caused significant prejudice and hardship, as it prevented the petitioner from collecting payments from various Government agencies for completed works due to mismatched GST registration details.
The respondents’ counsel, including the Senior Government Pleader and the Senior Standing Counsel, argued that the cancellation orders were lawful and in full compliance with the statutory provisions under Sections 29 and 30 of the CGST Act. They contended that the Madras High Court judgment should not be considered a precedent, as it undermines the statutory scheme. Furthermore, they asserted that the petitioner could still carry on business by applying for a new registration, implying that the cancellation did not cause any substantial prejudice to the petitioner. They emphasized that the petitioner failed to act within the provided timelines and any extended period, thus nullifying his claims for relief.
In a case involving the restoration of registration, the court addressed several key points related to the statutory provisions and the exercise of its powers under Article 226 of the Constitution of India. The petitioner argued that the court should direct the restoration of registration despite the statutory provisions and Circulars issued by the Central Board of Excise and Customs.
The court considered contentions from both sides and sought assistance from Adv. A Kumar to reach a proper conclusion. Adv. A Kumar presented judgments from the Division Bench of the Gujarat High Court in Special Civil Application No. 3442 of 2022 [Tahura Enterprise V. Union of India] and the Madhya Pradesh High Court in W.P. No. 8162 of 2021 [MAA Sharda Construction Company V. Union of India and Others].
Adv. A Kumar argued that the view adopted by the Madras High Court should be followed, emphasizing that tax laws should not create difficulties for businesses. Instead, the focus should be on the collection of taxes and penalties where applicable, without relying on technicalities to deny the restoration of registration. He contended that even if relief is granted to the petitioner, the court could stipulate conditions to ensure compliance with the tax laws while allowing the restoration of registration.
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