Denial of Revocation of Cancellation of GST Registration Affects Right to Carry on Trade and Commerce To A Citizen

GST – Denial of Revocation of Cancellation of Registration Affects Right to Carry on Trade And Commerce To A Citizen

Registration is the basic statutory requirement under GST to carry on business and trade. Consequent to COVID Pandemic situations in the last few years across the country, which resulted in the disruption to the business communities. Most of the taxpayers / traders lost their business and their registration were cancelled by the department on the ground of non-filing of returns for more than Six months. In the present scenario the litigation of cancellation of GST registration is the burning issues across the country. It is observed that most of the High Courts are loaded with the litigations on restoration of GST registration of the taxpayers.

It is pertinent to mention that there is statutory provision of revocation of cancellation of registration but there are number of registrants had failed to file revocation of cancellation of registration under Section 30 of the CGST Act, 2017. Even, though the Government had declared Amnesty scheme for non-filers of returns. But the said Amnesty scheme was made available to only for the taxpayers who failed to file GST returns but their registrations were not cancelled by the proper officer of GST. Therefore, the most of the registrants have also filed appeal before the Appellate authorities under Section 107 of CGST Act, 2017 for restoration of GST registration but their Appeals were rejected on the ground of limitation. Since, no efficacious remedy of appeal is available due to absence of GST Appellate Tribunal, there are numbers of registrants have approached to the Hon’ble High Courts by way of writ under Article 226 of the constitution of India, seeking relief of restoration of their GST registration.

Judgments of the High Courts:

The Hon’ble High Court of Madras in the case of TVL. Suguna Cutpiece Centre vs. Appellate Deputy Commissioner (ST) (GST), reported in 2022(61) G.S.T.L.515 (Mad.), while allowing of identical cases of forty two writ petitions in the matter of revocation of  cancellation registration held that “ the provisions of the Goods and Services Tax Act,2017 cannot interpreted in such a manner, so as to debar an assessee, either from obtaining registration or reviving the lapsed / cancelled registration as such an interpretation would be not only contrary to the Article 19(1)(g) of the Constitution of India but also in violation of Article 14 and Article 21 of the Constitution of India.” (Para 206)

Further, also held that “the provision 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.” (Para 225)

The Hon’ble High Court of Uttarakhand in the case of Vinod Kumar v. Commissioner Uttarakhand State GST, reported in [2022] 141 taxmann.com 503 (Uttarakhand), held that “it is apparent that the law made by the Parliament as well as Legislature with regard to the appeals is very strict, insofar as, that it does not provide an unlimited jurisdiction on the First Appellate Authority to extend the limitation beyond one month after the expiry of the prescribed limitation. In such case, the petitioner /appellant is put to hardship and is left without remedy. In such cases, the party concerned may face starvation because of denial of livelihood for want of GST registration. In this case, the petitioner / appellant is a semi-skilled labourer working as a painter doing painting on doors, windows of the houses. Now-a-days bills for any work executed for a private player or, even for the Government agency, are drawn on-line. In most cases, the production of the bill with the GST registration number. In the absence of GST registration number, a professional cannot raise a bill. So, if the petitioner is denied a GST registration number, it affects his chances of getting employment or executing works. Such denial of registration of GST number, therefore, affects his right to livelihood. If he is denied his right to livelihood because of the fact that his GST Registration number has been cancelled, and that he has no remedy to appeal, then it shall be violative of Article 21 of the Constitution as right to livelihood springs from the right to life as enshrined in Article 21 of the Constitution, and right to life of a citizen of this country. (Para-8)

The Hon’ble High Court of Orissa in the case of M/s Shree Hari Printers v. Commissioner, Commercial Taxes & GST – [2022] 142 taxmann.com 445 (Orissa), issued direction to the department for opening of GST portal for payment of tax and other dues and to enable filing of returns so as to consider application for revocation of cancelled registration of the petitioner.

Conclusion:  Therefore, the cancellation of GST registration is not an end in itself but the same is consequent upon deprivation of the fundamental rights of a citizen to carry out their business, trade and commerce for the whole of their life which is crucial for their livelihood and sustenance which is protected under the Article 19(1) (g) and Article 21 of the Constitution of India. Thus, the provision of GST enactments cannot be interpreted so as to deny the right to carry on trade or profession and 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. Thereby, the filed formations should exercise their judicious mind to cancel GST registration and refrain from mechanically to cancel GST registration. The filed formations should not act only as watch dog to safeguard revenue of the Government but also protect interest of the taxpayers for the generation of revenues of the Government.