Case Law Details
Jai Hind Enterprises Vs Assistant Commissioner of Commercial Taxes (Karnataka High Court)
The Karnataka High Court, in Jai Hind Enterprises Vs Assistant Commissioner of Commercial Taxes, considered a challenge to the cancellation of the petitioner’s GST registration for failure to file GST returns for more than six months. The petitioner had obtained GST registration on 28.06.2023, received a show cause notice dated 05.02.2024 and a subsequent notice dated 25.02.2024, but did not respond. Consequently, the registration was cancelled on 02.04.2024. The petitioner contended that genuine circumstances prevented timely filing of returns and that cancellation of registration would result in loss of revenue to the Government. The respondents argued that revocation under Section 30 and appeal under Section 107 of the CGST Act were subject to statutory time limits and that the writ petition was not maintainable due to the availability of an alternative remedy. The High Court referred to its earlier decisions holding that, although the Appellate Authority lacks power to condone delay beyond the prescribed period under Section 107, the High Court can exercise its jurisdiction under Article 226 of the Constitution to condone delay in appropriate cases. Accepting the petitioner’s explanation relating to the illness and death of the petitioner’s mother as a sufficient cause, the Court partly allowed the writ petition. It permitted the petitioner to file an appeal before the Appellate Authority within four weeks from receipt of the order and directed that, if filed within that period, the appeal should be decided on merits without being rejected on the ground of limitation. The benefit of the order would lapse if the appeal was not filed within the stipulated four weeks.
Cases Discussed
- Sri Kolapudi Enoch Washington Vs The Additional Commissioner (GST and Central Tax) & Others, 2022:KHC:37970
- M/s Nagson and Co Vs The Joint Commissioner of Central Tax & Others, 2022:KHC:38176
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner is before this Court calling in question an order dated 02.04.2024, passed by the first respondent, cancelling the registration of GST of the petitioner and has sought a consequential mandamus to reopen the portal of the petitioner.
2. Heard Sri H.R.Kambiyavar, learned counsel for the petitioner, Sri Sharad V. Magadum, learned Additional Government Advocate for respondent Nos.1 to 3 and Sri Girish Hulmani, learned counsel for respondent No.4.
3. Facts in brief, germane, are as follows:
The petitioner is a proprietor of M/s.Jaihind Enterprises, obtains GST certificate on 28.06.2023. It transpires that the petitioner defaulted in filing of returns for over six months. A show cause notice comes to be issued against the petitioner seeking to show cause as to why registration should not be cancelled, on 05.02.2024. The petitioner did not reply to the show cause notice. Another notice comes to be issued terming the petitioner to be a defaulter for not filing the return, on 25.02.2024. When no reply comes about, on 02.04.2024, the impugned order is passed. Challenging the impugned order, the petitioner is before this Court in the subject petition.
4. Learned counsel for the petitioner would submit that the petitioner had genuine reason for non-filing of the return for six months and delay under Section 39 ought to have been condoned by the respondent. It is his submission that cancellation of registration on non-filing of return is only a loss of revenue to the government. He would seek to place reliance upon several judgments on the issue.
5. Per contra, learned counsel appearing for the respondents would in unison contend that the act of the petitioner is not condonable. Cancellation of registration if happens, an application seeking revocation of the cancellation of the registration can be submitted only within the time prescribed as obtaining under Section 30 of the CGST Act. They would seek dismissal of the petition on the added score that the petitioner has alternative remedy of filing an appeal under Section 107 of the CGST Act.
6. The learned counsel for the petitioner on this, would contend that the delay would come in the way as an appeal under Section 107 of the CGST Act, as it should be preferred within 30 days of the cancellation of registration. The cancellation has happened on 02.04.2024 and the petition is preferred on 04.12.2024.
7. I have given my anxious consideration to the submissions made by the learned counsel for the respective parties and have perused the material on record.
8. The only issue that arises for consideration is, whether the cancellation of registration has happened in accordance with law or the petitioner has to be relegated to the Appellate Authority. The issue need not detain this Court for long or delve deep into the matter as several High Courts have condoned the act of delay in filing the GST returns or preferring an appeal caused due to enforcing circumstance.
9. A co-ordinate bench of this Court in two of its judgments considering the very same plea has held as follows:
In the case of SRI. KOLAPUDI ENOCH WASHINGTON Vs. THE ADDITIONAL COMMISSIONER (GST AND CENTRAL TAX AND OTHERS, reported in 2022:KHC:37970:
“5. As rightly contended by the learned counsel for the petitioner, though the 1st respondent – appellate authority does not have any power to condone the delay in preferring an appeal under Section 107 of the CGST Act, in a given case, it is open for this Court to condone the delay by exercising its powers under condone the delay by exercising its powers under Article 226 of the Constitution of India. In the instant case, it is the specific assertion of the petitioner that due to untimely demise of his Auditor and on account of bonafide reasons, unavoidable circumstances and sufficient cause, it was not possible for him to not only file the GST returns and make payment within the stipulated time but also could not prefer the appeal within the prescribed period. In my considered opinion, the explanation offered by the petitioner in not making GST payment, filing returns and preferring an appeal deserves to be accepted and by adopting a justice oriented approach, I deem it just and appropriate to set aside the impugned orders and direct the 2nd respondent to restore the GST registration of the petitioner, subject to payment of all dues by the petitioner.
(Emphasis supplied)
In the case of M/S NAGSON AND CO Vs. THE JOINT COMMISSIONER OF CENTRAL TAX AND OTHERS REPORTED IN 2022:KHC:38176:
“7. As rightly contended by the learned counsel for the petitioner, though the 1st respondent – Appellate Authority does not have any power to condone the delay in preferring an appeal under Section 107 of the CGST Act, in a given case, it is open for this Court to condone the delay by exercising its powers under Article 226 of the Constitution of India. In the instant case, it is the specific assertion of the petitioner that due to financial constraints and covid-19 pandemic and on account of bonafide reasons, unavoidable circumstances and sufficient cause, it was not possible for him to not only file the GST returns and make payment within the stipulated time, but also could not prefer the appeal within the prescribed period. In my considered opinion, the explanation offered by the petitioner in not making GST payment and delay in filing returns and preferring an appeal deserves to be accepted and by adopting a justice oriented approach, I deem it just and appropriate to set aside the impugned orders and direct the 2nd respondent to restore the GST registration of the petitioner, subject to payment of all dues by the petitioner.
(Emphasis supplied)
In the light of the afore-quoted judgments rendered by the co-ordinate bench, it is to be seen whether the reasons submitted by the petitioner for non-filing of the return becomes condonable or otherwise.
9. The averment in the petition is, that the petitioner’s mother due to terminal ill-ness was hospitalized and she eventually, passed away on 10.05.2023. Therefore, there has been delay in filing the appeal against an order of cancellation of registration. The reason is acceptable, as it is due to the illness of the mother and eventual death. It is in thosecircumstances, several Courts have condoned the delay owing to a circumstance which could not be out rid. Therefore, the judgments rendered by the co-ordinate bench supra, would completely come to the aid of the petitioner. In that light, the petition deserves to succeed, albeit, in part.
10. For the aforesaid reasons, the following:
ORDER
a. The petition is allowed in-part.
b. The petitioner is permitted to file an appeal against the cancellation of registration before the Appellate Authority within four weeks from the date of the receipt of a copy of this order.
c. In the event, the appeal is preferred within four weeks as aforesaid, it shall be considered on its merit and not reject the appeal on the ground of limitation.
d. In the event, the petitioner would not prefer an appeal within four weeks as permitted above, the benefit of the order rendered in the subject petition would not be available to the petitioner.
Ordered accordingly.
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