Case Law Details
Dharmesh Deshani (OPC) Private Limited Vs Union of India (Gujarat High Court)
Gujarat High Court recently addressed a petition filed by Dharmesh Deshani (OPC) (P.) Ltd. against the Union of India, challenging the cancellation of its Goods and Services Tax (GST) registration despite having deposited tax liabilities. The case highlights the procedural aspects of GST compliance and the High Court’s stance on rectifying defaults when tax is already paid.
The petitioner sought to quash a show cause notice dated January 9, 2024, and a subsequent order dated February 9, 2024, which cancelled its GST registration effective September 30, 2023. Additionally, the petitioner challenged the rejection of its revocation application and an appellate order affirming the cancellation. The core of the petitioner’s argument was its inability to file GST returns from September 2023 to December 2024.
However, the petitioner’s advocate, Mr. Avinash Poddar, informed the court that the company had already computed its tax liability based on available records and transactions. This liability, including interest, had been discharged through deposits in its Electronic Cash Ledger. An affidavit detailing these deposits was submitted to the court.
Conversely, Assistant Government Pleader Ms. Shrunjal Shah, representing the respondents, stated that if the petitioner was permitted to file the overdue GST returns, the authorities would process them and determine the tax liability in accordance with the law, taking into account the deposits already made.
Considering the submissions, the court acknowledged that the petitioner had already deposited the outstanding tax with interest, as if the returns had been filed. In the interest of justice, the court permitted the petitioner to file the pending GST returns manually from September 30, 2023, until the present, within two weeks.
The court’s order stipulated that if the filed returns were in accordance with the law and any further outstanding demand raised by the respondent was paid forthwith, the order of registration cancellation would stand revoked.
This ruling provides a measure of relief for businesses facing similar situations where procedural lapses in filing returns occur despite the underlying tax liability being discharged. While the court did not cite specific judicial precedents in its order, the decision aligns with the principle of allowing compliance and rectification, particularly when the revenue interest of the state is protected by the pre-payment of taxes. The judgment underscores a pragmatic approach to GST enforcement, emphasizing compliance rather than punitive measures when the financial obligation has been met.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1.Heard learned advocate Mr. Avinash Poddar for the petitioner and learned Assistant Government Pleader Mr. Shrunjal Shah for respondent Nos. 4 to 5.
2. Learned advocate Mr. Avinash Poddar has filed affidavit of the petitioner to place on record a copy of the Electronic Cash Ledger to demonstrate that though the petitioner has not filed GST Returns from September,2023 to December,2024, tax liability has been duly computed by the petitioner based on the available record and transaction, and such liability has already been discharged by way of depositing the same in Electronic Cash Ledger by the petitioner. The said affidavit is ordered to be taken on record.
3. This petition is filed with the following prayers:
“a. Issue writ of certiorari or any other appropriate writ, order or direction quashing and setting aside the impugned show cause notice dated 09.01.2024 in Form GST REG-17 and order dated 09.02.2024 in Form GST REG-19 issued by Respondent NO.5 which is marked as Annexure B and Annexure C.
b. Issue writ of certiorari or any other appropriate writ order or direction quashing and setting aside the impugned order rejecting the application of revocation dated 04.04.2024 in REG-05 which is marked as Annexure B.
c. Issue writ of certiorari or any other appropriate writ, order or direction quashing and to set aside the order passed in Form APL-02 dated 13.11.2024 passed by Respondent No.04 which is marked as Annexure G.
d. Issue a writ of mandamus or writ in the nature of mandamus or any other writ, orders or directions, directing the respondents to forthwith restore the registration certificate of the petitioner.”
4. The basic contention of the petitioner is that the petitioner could not file GST returns for the prescribed period and as such, registration of the petitioner is cancelled by the respondent pursuant to the show cause notice dated 09.01.2024 by order dated 09.02.2024 w.e.f. 30.09.2023 by invoking section 29(2)(c) of the GST Act as the petitioner has not filed returns thereafter.
5. Learned advocate Mr. Poddar submitted that the petitioner is ready and willing to file GST returns as the petitioner has already deposited the requisite tax along with interest through Electronic Cash Ledger as stated in the affidavit filed by the petitioner which can be verified by the respondent-authorities.
6. Learned AGP Ms. Shah, on the other hand, submitted that if the petitioner is permitted to file the GST returns as required under section 29(2)(c) of the GST Act, the respondent-authority shall process the same and determine the tax liability in accordance with the provisions of the Act after considering the deposit made by the petitioner in the Electronic Cash Ledger, as stated in the affidavit filed today.
7. Learned advocate Mr. Poddar for the petitioner submitted that if permitted, the petitioner shall file the pending GST Returns manually from 30.09.2023 till date within a period of two weeks from today.
8. Considering the above submissions that there is no other contention raised on behalf of the petitioner as well as the respondent and considering the fact that the petitioner has already deposited the outstanding tax with interest as if the returns would have been filed, in the interest of justice, the petitioner is permitted to file returns, as prayed for by the respondent authority and if the same are in accordance with law and the petitioner is further directed to pay outstanding demand, if any raised by the respondent forthwith, then in that circumstances, the order of cancellation shall stands revoked.
The petition is accordingly disposed of. No order as to costs.
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