Case Law Details
Abdul Nayim Chowdhury Vs Joint Commissioner of State Tax (Calcutta High Court)
In a significant judgment, the Calcutta High Court directed the restoration of GST registration for Abdul Nayim Chowdhury, a small businessman, after he complied with specific tax conditions. The court’s decision underscores the importance of allowing businesses to continue their operations, even after procedural lapses, provided they rectify their errors and meet the necessary compliance requirements. This ruling not only impacts the petitioner but also sets a precedent for similar cases where businesses face the cancellation of GST registrations due to non-compliance.
The case arose when Abdul Nayim Chowdhury’s GST registration was canceled by an order dated January 19, 2023, after he failed to file returns for a continuous period of six months. The petitioner argued that unforeseen circumstances prevented him from responding to the show-cause notice issued on January 6, 2023, and from applying for the revocation of the cancellation order. Chowdhury claimed that he was unaware of the notice or the cancellation order, which further complicated his situation.
The court, upon hearing the arguments, considered several key factors:
1. Petitioner’s Intent to Comply: Chowdhury expressed his willingness to comply with the provisions of the GST Act by filing all pending returns and paying any due taxes, interest, penalties, and fines. This demonstrated his genuine intent to rectify the situation and continue his business operations.
2. Impact on Revenue: The court acknowledged that the cancellation of GST registration could be counterproductive for the revenue authorities. Without an active GST registration, the petitioner would be unable to raise invoices or conduct business, ultimately hindering the collection of taxes. The court recognized that allowing the petitioner to continue his business would be in the interest of revenue recovery.
3. Case Law Reference: The court referenced a similar judgment in the case of Subhankar Golder v. Assistant Commissioner of State Tax, Serampore Charge & Ors. (MAT 639 of 2024), where a Division Bench of the Calcutta High Court had set aside a cancellation order under similar circumstances. This provided a legal basis for granting relief to the petitioner.
4. Court’s Direction: The court set aside the order canceling Chowdhury’s GST registration, subject to his compliance with specific conditions. These included filing all pending returns and paying the requisite taxes, interest, fines, and penalties within four weeks from receiving the court’s order. The court also directed the respondents to activate the GST portal within one week to enable the petitioner to comply with these conditions.
The Calcutta High Court’s decision in Abdul Nayim Chowdhury vs. Joint Commissioner of State Tax is a crucial reminder of the judiciary’s role in balancing the enforcement of tax laws with the need to support small businesses. By allowing the restoration of GST registration upon compliance, the court has provided a lifeline to businesses that may have faced temporary setbacks but are willing to make amends.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1. Affidavit of service filed in Court today is taken on record.
2. The present writ petition has been filed, inter alia, challenging the order of cancellation of registration of the petitioner passed under the Central/West Bengal Goods and Services Tax Act, 2017 (hereinafter referred to as the “said Act”).
3. Records reveal that pursuant to the show cause issued on 6th January, 2023, calling upon the petitioner to show cause as to why the petitioner’s registration shall not be cancelled for having not filed returns for a continuous period of six months, by an order dated 19th January, 2023, the petitioner’s registration under the said Act was cancelled.
4. Dey, learned advocate representing the petitioner submits that the petitioner was all along and is interested to comply with the provisions of the said Act. He submits that by reasons of unforeseen circumstances, the petitioner could not apply for revocation of the order of cancellation. According to the petitioner, the petitioner did not have the knowledge of the show cause or the order of cancellation. He submits that the petitioner should be afforded with an opportunity to file his returns by restoring his registration and the petitioner undertakes to make payment of all arrear tax, interest, penalty and fine as may be found due.
5. Mr. Siddiqui, learned advocate enters appearance on behalf of the State-respondents
6. Having heard the learned advocates appearing for the respective parties and having considered the materials on record, I am of the view that having regard to the case made out by the petitioner that the petitioner was prevented by sufficient cause from firstly responding to the show cause and secondly from filing of an application for revocation of the order of cancellation of registration, an opportunity should be granted to the petitioner, who is only a small businessman, to continue with his business and profession, especially when it is not the case of the respondents that the petitioner had been adapting dubious process to evade tax. Taking note of the fact that the suspension/revocation of license would be counterproductive and works against the interest of the revenue since, the petitioner in such a case would not able to carry on his business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of tax, I am of the view that the respondents should take a pragmatic view in the matter and permit the petitioner to carry on his business.
7. Having regard to the aforesaid and taking note of the direction issued by the Hon’ble Division Bench of this Court in the case of Subhankar Golder v. Assistant Commissioner of State Tax, Serampore Charge & Ors. (MAT 639 of 2024) on 9th April, 2024, I propose to set aside the order dated 19th January, 2023, cancelling the registration of the petitioner under the said Act, subject to the condition that the petitioner files his returns for the entire period of default and pays requisite amount of tax, interest, fine and penalty, if not already paid.
8. It is made clear that if the petitioner complies with the directions/conditions noted above, within 4 weeks from the date of receipt of the server copy of this order, the petitioner’s registration under the said Act shall be restored by the Jurisdictional Officer. However, if the petitioner fails to comply with the directions as aforesaid, the benefit of this order will not enure to the petitioner and the writ petition would stand automatically dismissed.
9. For the purpose of compliance of the above directions, the respondents are directed to activate the portal within one week from the date of communication of this order, so that the petitioner can file his returns, pays requisite amount of tax, interest, fine and penalty, if not already paid.
10. Since, no affidavit-in-opposition has been called for, the allegations made in the writ petition are deemed not to have been admitted by the respondents.
11. With the above direction and observations, the writ petition is disposed of without any order as to costs.
12. All parties shall act on the basis of the server copy of this order duly downloaded from the official website of this Court.
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