Tvl. Suguna Cutpiece Center Vs The Appellate Deputy Commissioner (ST) (GST) (Madras High Court)
These Writ Petitions pertain to the challenge to the cancellation of GST Registrations issued to the petitioners under the provisions of the Tamil Nadu Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017. Some of the petitioners have filed these Writ Petitions against the order of the cancellation of GST registration, while, some of the petitioners have filed these Writ Petitions against the order passed in the appeals filed against the order of the cancellation of GST registration.
The learned Special Government Pleader would further submit that though the petitioner has belatedly filed the returns and paid the tax, the appeal was beyond the limitation. It is submitted that though the petitioner has paid the tax and filed the returns belatedly, nevertheless the petitioner having not opted for filing suitable application for revocation of cancellation of registration, the relief sought for in this Writ Petition cannot be granted.
High court held that no useful purpose will be served by keeping these petitioners out of the bounds of GST regime under the respective GST enactments other than to allow further leakage of the revenue and to isolate these petitioners from the main stream contrary to the objects of the respective GST enactments.
The purpose of GST registration is only to ensure just tax gets collected on supplies of goods or service or both and is paid to the exchequer. Keeping these petitioners outside the bounds of the GST regime is a self defeating move as no tax will get paid on the supplies of these petitioners.
By not allowing the petitioners to revive their registration is to de-recognise a whole lot of entrepreneurs and to not to collect GST at all from them.
Notwithstanding the fact that the petitioners have shown utter disregard to the provisions of the Acts and have failed to take advantage of the amnesty scheme given to revive their registration, this Court is inclined to quash the impugned orders with grant consequential reliefs subject to terms.
The provisions of the GST enactments cannot be interpreted so as to deny the right to carry on Trade and Commerce to a citizen and subjects. The constitutional guarantee is unconditional and unequivocal and must be enforced regardless of the defect in the scheme of the GST enactments. The right to carry on trade or profession also cannot be curtailed. Only reasonable restriction can be imposed. To deny such rights would militate against their rights under Article 14, read with Article 19 (1)(g) and Article 21 of the Constitution of India.
As original or as appellate authority exercising power under the respective enactments, quasi judicial officers were bound by the provisions of the Act and the limitation under it, they have acted in accordance with law. They cannot look beyond the limitations prescribed under provisions of the Act. Therefore, no fault can be attributed to their action.
This is a fit case for exercising the power under Article 226 of the Constitution of India in favour of the petitioners by quashing the impugned orders and to grant consequential relief to the petitioners. By doing so, the Court is effectuating the object under the GST enactment of levying and collecting just tax from every assessee who either supplies goods or service. Legitimate Trade and Commerce by every supplier should be allowed to be carried on subject to payment of tax and statutory compliance. Therefore, the impugned orders deserve to be quashed.
These petitioners deserve a chance and therefore should be allowed to revive their registration so that they can proceed to regularize the defaults. The authorities acting under the Act may impose penalty with the gravity of lapses committed by these petitioners by issuing notice. If required, the Central Government and the State Government may also suitably amend the Rules to levy penalty so that it acts as a deterrent on others from adopting casual approach.
In the light of the above discussion, these Writ Petitions are allowed subject to the following conditions:-
i. The petitioners are directed to file their returns for the period prior to the cancellation of registration, if such returns have not been already filed, together with tax defaulted which has not been paid prior to cancellation along with interest for such belated payment of tax and fine and fee fixed for belated filing of returns for the defaulted period under the provisions of the Act, within a period of forty five (45) days from the date of receipt of a copy of this order, if it has not been already paid.
ii. It is made clear that such payment of Tax, Interest, fine / fee and etc. shall not be allowed to be made or adjusted from and out of any Input Tax Credit which may be lying unutilized or unclaimed in the hands of these petitioners.
iii. If any Input Tax Credit has remained utilized, it shall not be utilised until it is scrutinized and approved by an appropriate or a competent officer of the Department.
iv. Only such approved Input Tax Credit shall be allowed for being utilized thereafter for discharging future tax liability under the Act and Rule.
v. The petitioners shall also pay GST and file the returns for the period subsequent to the cancellation of the registration by declaring the correct value of supplies and payment of GST shall also be in cash.
vi. If any Input Tax Credit was earned, it shall be allowed to be utilised only after scrutinising and approving by the respondents or any other competent authority.
vii. The respondents may also impose such restrictions / limitation on petitioners as may be warranted to ensure that there is no undue passing of Input Tax Credit pending such exercise and to ensure that there is no violation or an attempt to do bill trading by taking advantage of this order.
viii. On payment of tax, penalty and uploading of returns, the registration shall stand revived forthwith.
ix. The respondents shall take suitable steps by instructing GST Network, New Delhi to make suitable changes in the architecture of the GST Web portal to allow these petitioners to file their returns and to pay the tax/penalty/fine.
x. The above exercise shall be carried out by the respondents within a period of thirty (30) days from the date of receipt of a copy of this order.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
By this common order, all the Writ Petitions are being disposed. Since a common order is being passed in all these Writ Petitions, I have summarized the submissions of the learned counsel for the respective petitioners and the learned counsel for the respondents in the succeeding paragraphs upto paragraph No.149. Discussion for arriving at the conclusion starts from paragraph No.150 onwards.
2. These Writ Petitions pertain to the challenge to the cancellation of GST Registrations issued to the petitioners under the provisions of the Tamil Nadu Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017. Some of the petitioners have filed these Writ Petitions against the order of the cancellation of GST registration, while, some of the petitioners have filed these Writ Petitions against the order passed in the appeals filed against the order of the cancellation of GST registration. Details and prayer of the Writ Petitions are given as follows:-
