Case Law Details
Tvl. A. V. Traders Vs Commercial Tax Officer (Kerala High Court)
Kerala High Court held that for contravention of the provisions of the GST Act, department can take civil and/ or criminal action against the accused, however, suspension of GST registration directly hits the fundamental right and hence unjustified.
Facts- Challenging the impugned suspension of registration and the show cause notice issued for the purpose of cancellation of GST number of the petitioner, the present Writ Petition.
Notably, the petitioner contested that the notice in Form GST REG-17 dated 05.09.2024 was issued to the petitioner, for which, the petitioner also filed a reply on 12.09.2024. However, without considering the reply, till date, the respondent has not taken any decision to revoke the suspension of GST registration.
Conclusion- Held that the respondent has passed the impugned order without considering the reply submitted by the petitioner. As already observed, if at all the petitioner indulged in conducting the business in contravention of the provisions of the Act, the respondent is supposed to take both civil as well as the criminal action against the petitioner in the manner provided in law, but certainly, ought not to have suspended the GST registration of the petitioner. It directly hit the fundamental right of the petitioner since the petitioner is entitled to trade and carry on the business. Therefore, the impugned proceedings dated 05.09.2024 are liable to be set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Challenging the impugned suspension of registration and the show cause notice issued for the purpose of cancellation of GST number of the petitioner, the present Writ Petition.
2. The learned counsel for the petitioner submitted that the notice in Form GST REG-17 dated 05.09.2024 was issued to the petitioner, for which, the petitioner also filed a reply on 12.09.2024. However, according to the petitioner, without considering the reply, till date, the respondent has not taken any decision to revoke the suspension of GST registration. He would further submit that the petitioner is a genuine company, conducting the business and regularly submitting the monthly GSTR returns and remitted the taxes in accordance with law. However, due to the suspension of GST registration, the petitioner is not in a position to carry on the business and file the returns. He also points that it is the fundamental right of a person to carry on the business in the country. Therefore, he submitted that, by virtue of suspension of GST registration, the petitioner is ultimately prevented to carry on the business and it is clear violation of constitutional right.
2.1. The learned counsel for the petitioner would further submit that in the event, for any reason, the respondent is supposed to take an appropriate legal action against the petitioner, stating that the GST registration is misused. Instead of taking such appropriate prosecution in the manner provided in the Act, the respondent arbitrarily, in violation of constitutional right, suspended the GST registration of the petitioner on 05.09.2024 and also issued the show cause notice on the same date, i.e. 05.09.2024. After receipt of the suspension order as well as the show cause notice dated 05.09.2024, the petitioner also filed a reply on 12.09.2024, by expressing their stand. However, till date, no order has been passed by the respondent, the petitioner has filed the present Writ Petition.
3. When this matter was taken up on last occasion, i.e. on 21.10.2024, for the purpose of getting appropriate instructions and for filing counter affidavit, it was adjourned today, i.e., 29.10.2024. However, when the matter is taken up today, a learned counsel representing Mr.T.N.C.Kaushik, learned Additional Government Pleader submits that Mr.T.N.C.Kaushik is held up in the some other Court. However, on instructions, he submits that the petitioner’s reply will be considered and appropriate orders will be passed within the stipulated time that may be fixed by this Court.
4. Heard the learned counsel for the petitioner as well as the learned Additional Government Pleader (Taxes) for respondent and also perused the materials available on record.
5. Admittedly, it is the right of the petitioner to carry on the business and it is the bounden duty of the respondent to provide the GST registration in the manner known to law. Even, if the petitioner company indulged in allegedly obtaining Section 29(2)(e) registration by means of fraud or not conducting the business from declared place in violation of provisions of the Act, the respondent can very well initiate legal action by invoking civil and penal provisions by way of civil and criminal cases. Instead of doing so, the respondent has outrightly cancelled the GST registration of the petitioner. It is the fundamental right of the petitioner to trade and carry on the business in the country and the State can impose reasonable restrictions. However, in the present case, the respondent without resorting to take legal action invoking penal provisions, suspended the GST registration of the petitioner and deprived the petitioner from carrying on the business, which amounts to violation of fundamental right of the petitioner and prevented the petitioner, which, cannot be sustained.
6. In the present case, the suspension order was passed on 05.09.2024, for which, admittedly, the petitioner has filed their reply on 12.09.2024. When the reply was filed by the petitioner pursuant to the impugned order, it is incumbent upon the respondent to consider the same and pass appropriate orders in accordance with law. It appears that the respondent has passed the impugned order without considering the reply submitted by the petitioner. As already observed, if at all the petitioner indulged in conducting the business in contravention of the provisions of the Act, the respondent is supposed to take both civil as well as the criminal action against the petitioner in the manner provided in law, but certainly, ought not to have suspended the GST registration of the petitioner. It directly hit the fundamental right of the petitioner since the petitioner is entitled to trade and carry on the business. Therefore, the impugned proceedings dated 05.09.2024 are liable to be set aside.
7. Accordingly, the impugned proceedings dated 05.09.2024 are set aside and the respondent is directed to consider the petitioner’s reply dated 12.09.2024 and pass appropriate orders on merits and in accordance with law to revoke the suspension of GST registration.
8. With the above direction, this Writ Petition is disposed of. No costs. Consequently, connected Miscellaneous Petition is closed.
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