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SKP PHARMACHEM Vs UNION OF INDIA

Case Title

Skp Pharmachem Vs Union Of India

Court

Gujarat High Court

Honorable judges

Justice Sonia Gokani

Justice Sandeep N. Bhatt

Citation

2023 (02) GSTPanacea 283 HC Gujarat

R/SPECIAL CIVIL APPLICATION NO. 13744 of 2022

Judgement Date

07- January-2023

This lengthy summary pertains to a legal petition aimed at contesting the decision not to cancel composition permission under the Central/Gujarat Goods and Services Tax Act, 2017, through the application of Article 226 of the Indian Constitution. Here’s a breakdown:

1. Introduction of the Petition: The petition is filed to contest the decision not to cancel composition permission under the GST Act, utilizing Article 226 of the Constitution of India.

2.Background and Facts: 2.1. Petitioner Details: The petitioner is identified as a proprietorship entity duly registered under the GST Acts, with registration granted on December 26, 2021. 2.2. Error Allegation: It is claimed that the petitioner’s tax consultant made an erroneous filing or interpretation leading to a situation where composition permission was obtained mistakenly.

3.Legal Basis: The petition is grounded in Article 226 of the Indian Constitution, which provides for the power of High Courts to issue certain writs.

4.Argument: The main contention appears to be that the composition permission was acquired due to an error, and thus, it should be revoked. Presumably, there would be legal arguments presented to support this contention, such as misinterpretation of laws or procedural errors.

5.Relief Sought: The petitioner is likely seeking the court to intervene and annul the composition permission granted erroneously.

6.Implications: The outcome of this petition could have significant implications for the petitioner’s tax status and obligations under the GST Act. Depending on the decision, the petitioner may either remain under the composition scheme or be subject to regular GST compliance requirements.

Overall, the summary outlines the petitioner’s challenge against the non-cancellation of composition permission under the GST Act, highlighting the factual background, legal basis, arguments, and relief sought.

which the application for withdrawal was made. The petitioner contends that this withdrawal should have been with retrospective effect, considering that the error was unintentional and promptly rectified upon discovery. The petitioner asserts that they did not utilize the composition permission for any supplies and that their only transaction under the said permission was an export, which was unintentional due to a lack of awareness regarding the ineligibility for exports under composition. Additionally, the petitioner highlights that they immediately applied for withdrawal from composition levy upon discovering the error, indicating their willingness to comply with the correct procedures.

4.The petitioner argues that the non-retrospective cancellation of composition permission has resulted in adverse consequences for them. Firstly, they are now liable to pay taxes as per the regular scheme, which would have been otherwise lower under the composition scheme. Secondly, they face potential penal consequences for inadvertently exporting goods under composition without realizing its incompatibility with exports. The petitioner contends that these consequences are unjust considering their genuine mistake and proactive steps to rectify it.

5.The petitioner brings this matter before the court under Article 226 of the Constitution of India, seeking relief against the non-retrospective cancellation of composition permission. They argue that such cancellation should be backdated to the date of registration or, at the very least, to the date of the erroneous export transaction. The petitioner requests the court to direct the respondents to reconsider the cancellation with retrospective effect, taking into account the circumstances of the case and the petitioner’s compliance with the correct procedures upon discovering the error.

6.In response, the respondents may argue that the provisions of the GST Act do not allow for retrospective cancellation of composition permission. They may contend that the petitioner’s mistake, though unintentional, does not warrant special treatment under the law. Additionally, they may assert that the petitioner had the option to apply for withdrawal from composition levy earlier, which would have mitigated the consequences of the error. However, they may also consider the petitioner’s proactive steps in rectifying the mistake and evaluate whether any leniency can be extended in this particular case.

7.The court will need to consider the arguments presented by both parties and examine the relevant provisions of the GST Act regarding the cancellation of composition permission. It will need to determine whether retrospective cancellation is permissible under the law and whether the petitioner’s circumstances merit such relief. The court may also assess any precedents or legal principles that could guide its decision in this matter.

8.Ultimately, the court’s decision will have implications not only for the petitioner but also for other taxpayers who may find themselves in similar situations in the future. It will need to strike a balance between upholding the integrity of the tax system and providing equitable relief to taxpayers who have made genuine errors.

The petitioner in this case is seeking to challenge the refusal to cancel their composition permission under the Central/Gujarat Goods and Services Tax Act, 2017, through Article 226 of the Constitution of India. The petitioner is a proprietorship concern registered under the GST Act since December 26, 2021. It claims that its tax consultant mistakenly opted for composition under Section of the GST Act during registration, and though the composition permission was granted, the petitioner did not utilize it for any supply.

However, in March 2022, the petitioner received an export order and exported goods without realizing it was operating under the composition permission, which does not allow for exports. The respondents accepted the Letter of Undertaking for tax-free export. Upon realizing the error while filing returns in March 2022, the petitioner immediately applied to withdraw from composition levy on April 8, 2022, citing the export transaction as grounds for withdrawal. However, the withdrawal application could only be made prospectively on the portal.

The petitioner’s grievance is that despite applying for withdrawal on April 8, 2022, the composition permission was only withdrawn with effect from that date, and the portal did not permit retrospective withdrawal. They raised this issue with the GST helpdesk on May 12, 2022, but the response received on June 6, 2022, stated that cancellation of permission was only possible for the financial year in which the application was made, making retrospective cancellation unfeasible.

As a result, the petitioner could not file returns as a regular taxable person for March 2022 when the export transaction occurred. They subsequently applied to the jurisdictional officer on June 16, 2022, requesting cancellation of composition permission from March 1, 2022, to enable them to file returns as a regular taxable person.

However, the petitioner received a notice on June 27, 2022, as a return defaulter, and was asked to file pending returns. On June 29, 2022, the second respondent authority informed the petitioner that they would not be able to fulfill their request for retrospective cancellation of composition permission.

In summary, the petitioner contends that they were erroneously granted composition permission, which hindered their ability to export goods and file returns correctly. Despite their efforts to rectify the situation, they faced obstacles due to procedural limitations, leading them to seek relief through legal recourse.

This petition seeks to challenge the decision not to cancel composition permission under the Central/Gujarat Goods and Services Tax Act, 2017, through Article 226 of the Indian Constitution.

The petitioner, a proprietorship concern registered under the GST Acts since December 26, 2021, alleges that their tax consultant mistakenly opted for composition under Section 10 of the GST Acts during registration. This error was discovered in March 2022 when the petitioner received an export order, leading them to export goods without realizing they were ineligible under the composition scheme. Despite promptly applying to withdraw from composition on April 8, 2022, citing the export transaction as grounds, the withdrawal could only be prospective, causing inconvenience.

The petitioner’s grievance stems from the retrospective withdrawal not being permitted, leaving them unable to file returns as a regular taxable person for March 2022, when the export occurred. Despite applying to the jurisdictional officer on June 16, 2022, requesting cancellation of composition permission from March 1, 2022, to facilitate filing returns as a regular taxpayer, no positive solution emerged.

Subsequent notices from tax authorities treating the petitioner as a return defaulter exacerbated the situation. The petitioner argues they have already paid the due tax, and the officer’s actions disregarded their genuine difficulties.

Consequently, the petitioner approaches the court seeking:

A. Issuance of a writ directing the respondents to cancel the composition permission from March 1, 2022. B. Quashing of the notice treating the petitioner as a return defaulter. C. Pending the petition’s admission and final hearing, a direction to the respondents to address the petitioner’s grievances.

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