Case Law Details
3 Star Foam And Furnishing Vs Superintendent Of Central Tax (Karnataka High Court)
The Karnataka High Court recently addressed the case of 3 Star Foam And Furnishing versus the Superintendent of Central Tax concerning the cancellation of GST registration. The petitioner contested the cancellation order issued by the tax authority and subsequent confirmation by the Appellate Authority.
The crux of the matter revolved around the cancellation order (Annexure-‘B’) issued on 31st January 2023. The petitioner argued that the cancellation was unjustified due to genuine reasons, primarily citing personal difficulties such as a family member’s illness and ensuing financial strain. The High Court, invoking Article 226 of the Constitution of India, evaluated the legality of Annexure-‘B’ independently from the appellate decision (Annexure-‘A’). The court noted procedural lapses by the tax authority in not considering the petitioner’s responses adequately.
Moreover, the court found the cancellation order lacking in clarity and adequate justification, especially in light of the petitioner’s explanation for non-compliance. The judgment emphasized the petitioner’s right to be heard and the principle of natural justice in administrative decisions.
In overturning the cancellation, the High Court ordered the revival of the petitioner’s GST registration under the condition that all pending returns from January 2023 onward be filed within four weeks. The decision effectively nullified the appellate confirmation (Annexure-‘A’) as unnecessary, given the primary order’s reversal.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has called in question the validity of the order passed by respondent No.2 at Annexure-‘B’ dated 31.01.2023 whereby the registration of petitioner has been cancelled. The petitioner has also challenged the order at Annexure-‘A’ dated 01.01.2024, whereby the Appellate Authority has confirmed the order of cancellation and appeal has been rejected, while observing that the appeal is filed beyond the period within which the delay could be condoned.
2. It is the case of the petitioner that this Court, in exercise of power under Article 226 of the Constitution of India can enter into the correctness of the order at Annexure-‘B’ itself and accordingly, even side stepping the order of Appellate Authority at Annexure-‘A’, the Court can take up the order of cancellation at Annexure-‘B’ and decide on the legal validity of the same.
3. It is further submitted that the reasons leading to cancellation of registration is due to bona fide reasons and that the petitioner was not in a position to place such bona fide reasons before the Authority, as his father was unwell and was suffering from serious financial constraints.
4. Taking note that the order at Annexure-‘B’ is passed only on the ground that the petitioner had not responded to the queries in the system and also noticing that the order of cancellation of registration is cryptic and that the Authority was not in a position to appreciate the stand of the petitioner in the absence of any reply, the matter requires consideration. The Court can consider the validity of Annexure-‘B’, even in exercise of power under Article 226 of the Constitution of India under appropriate circumstances.
5. In light of the contentions made out and the reasons assigned for not having participated in the proceedings and also explaining the lapse in not filing the GST returns, the order at Annexure-‘B’ dated 31.01.2023 is set aside and the registration of petitioner would stand revived which would be subject to the condition that the petitioner is to file the returns from 31.01.2023 till date and clear all the dues and the said process is to be completed within four weeks from the date of receipt of certified copy of the order. Further, in light of deciding on the validity of Annexure-‘B’, the order of confirmation passed by the Appellate Authority at Annexure-‘A’ need not be entered into and is liable to be ignored and does not call for any adjudication.
Accordingly, the petition is disposed off.
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