Case Law Details
State of Kerala Vs West Bengal Lottery Stockists Syndicate Private Limited (Kerala High Court)
Kerala high court In the case of West Bengal Lottery Stockist Syndicate Pvt Ltd, HC held that Such clarification include information to ascertain the legality of the business proposed to be conducted by the applicant, but it does not include furnishing of any documents other than the documents required to be uploaded under Rule 8(4) of CGST Rules. High court directed the assessee to file an application afresh.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
This appeal involves interpretation of Rule 9(2) of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as ‘the Rules’) regarding furnishing of clarification, information and documents in relation to an application for registration made under Section 25 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the Act’).
2. The writ petition W.P(C) No.7445/2019 was filed by M/s. West Bengal Lottery Stockists Syndicate Private Limited, the first respondent in the appeal. The first respondent submitted online application for registration under the Act in terms of Rule 8. The application was uploaded on 16.01.2019. The first respondent received Ext.P8 notice dated 31.01.2019 from the State Tax Officer seeking additional information as follows:
“1. Documents to prove the ownership of the business premises and Bank details of the directors are not uploaded.
2. As per your application for registration you are intend(ing) to deal Lottery Services. But documents to prove that you are authorized to deal the lottery services under the following provisions are not furnished. 1) The Lotteries (Regulation) Act, 1998. (2) The Lotteries (Regulation) Rules, 2010. (3) Kerala Paper Lotteries (Regulation) Rules, 2005. (4) Kerala Paper Lotteries (Regulation) Amendment Rules, 2018. (5) Direction u/s. 10 of the Lotteries (Regulation) Act, 1998 vide FNO/17013/2/2011 CSR-I dated 2nd August 2011 by Joint Secretary to Govt. of India, Ministry of Home Affairs.”
The first respondent was directed to submit reply to the notice by 08.02.2019. However, the first respondent received Ext.P10 order dated 02.02.2019 rejecting the application for registration.
3. The first respondent filed the writ petition challenging the validity of Ext.P8 notice and Ext.P10 order, seeking a relief of declaration that it is a registered dealer and it is entitled to get a certificate of registration. The first respondent also sought a direction to be issued to the State Tax Officer to issue certificate of registration to it in the prescribed form. Certain other incidental reliefs were also sought in the writ petition.
4. A counter affidavit was filed in the writ petition on behalf of the fourth respondent in the writ petition (State Tax Officer, Palakkad). It was stated in the counter affidavit that the writ petitioner was not entitled to have any deemed registration. It was also stated in the counter affidavit that the writ petitioner had failed to produce the information required as per Ext.P8 notice which was obligatory under the Act.
5. The learned Single Judge upheld the defect noted as item No.1 in Ext.P8 notice. However, regarding the documents mentioned under item No.2 in Ext.P8, the learned Single Judge found that production of those documents by the applicant could not be insisted. The learned Single Judge disposed of the writ petition stating as follows:
“This Court is of the view that the matter shall be reconsidered de hors any reasons as stated in the impugned order and a fresh decision shall be taken in accordance with the GST Act and Rules on submitting the application by the petitioner. The previous rejection of the application will not stand in the way of the petitioner in filing a fresh application. It is made clear that de hors the reasons stated in the impugned order, it shall be considered afresh.”
Assailing the judgment of the learned Single Judge, the State and its officials have filed this appeal.
6. We have heard Sri. Pallav Shishodia, learned Senior Counsel who appeared for the appellants who was assisted by Sri.C.E.Unnikrishnan, Special Government Pleader (Taxes) and also Sri. A. Kumar, learned counsel for the first respondent.
7. The first respondent had raised a plea that it is entitled to have deemed registration as provided under Rule 9(5) because no action was taken on the application submitted by it within a period of three working days from the date of submission of the application. This plea was negatived by the learned Single Judge holding that the first respondent would be entitled to have the benefit of such deemed registration only if it is proved that there was no action at all taken on the application within a period of three working days from the date of submission of the application. It was held that, absence of any communication to the first respondent regarding the action taken on the application, is not a ground to have the benefit of such deemed registration. The first respondent has not filed any appeal challenging the aforesaid finding against it. Therefore, we are not burdened with the task of adjudicating in this appeal whether the first respondent is entitled to have the benefit of deemed registration under the Act.
8. Learned Single Judge has also upheld the demand for production of documents mentioned as item No.1 in Ext.P8 notice. Learned Single Judge has held that the writ petitioner will have to satisfy all relevant materials like proving ownership of business through such documents which may be required and also such details which may be required to be furnished under the Act and the Rules which are relevant. The first respondent has not filed any appeal challenging this finding also.
9. Learned Single Judge has declined to interfere with Ext.P10 order rejecting the application for registration submitted by the first respondent. However, learned Single Judge has given opportunity to the first respondent to file fresh application for registration. This finding also remains unchallenged by the first respondent/writ petitioner.
10. The appellants are aggrieved by the direction given by the learned Single Judge that on submission of fresh application by the writ petitioner, such application shall be considered de hors the reasons stated in Ext.P10 order.
11. Section 22 of the Act states who are the persons liable for registration under the Act. Section 23 of the Act states the persons who are not liable for registration. Section 24 of the Act provides for compulsory registration in certain cases. Section 25(1) of the Act provides that every person who is liable to be registered under the Act shall apply for registration within thirty days from the date on which he becomes liable to registration in such manner and subject to such conditions as may be prescribed. Section 25(3) of the Act provides that a person, though not liable to be registered under Section 22 or Section 24, may get himself registered voluntarily and all provisions of the Act, as are applicable to a registered person, shall apply to such person.
12. The manner in which application for registration has to be made is provided under Rule 8. Rule 8(4) reads as follows:
“(4). Using the reference number generated under sub-rule (3), the applicant shall electronically submit an application in Part B of FORM GST REG-01, duly signed or verified through electronic verification code, along with the documents specified in the said Form at the common portal, either directly or through a Facilitation Centre notified by the Commissioner.”
13. Rule 9 reads as follows:
“9. Verification of the application and approval
(1) The application shall be forwarded to the proper officer who shall examine the application and the accompanying documents and if the same are found to be in order, approve the grant of registration to the applicant within a period of three working days from the date of submission of the application.
(2) Where the application submitted under rule 8 is found to be deficient, either in terms of any information or any document required to be furnished under the said rule, or where the proper officer requires any clarification with regard to any information provided in the application or documents furnished therewith, he may issue a notice to the applicant electronically in FORM GST REG-03 within a period of three working days from the date of submission of the application and the applicant shall furnish such clarification, information or documents electronically, in FORM GST REG-04, within a period of seven working days from the date of the receipt of such notice.
Explanation: For the purposes of this sub-rule, the expression “clarification” includes modification or correction of particulars declared in the application for registration, other than Permanent Account Number, State, mobile number and e-mail address declared in Part A of FORM GST REG-01.
(3) Where the proper officer is satisfied with the clarification, information or documents furnished by the applicant, he may approve the grant of registration to the applicant within a period of seven working days from the date of the receipt of such clarification or information or documents.
(4) Where no reply is furnished by the applicant in response to the notice issued under sub-rule (2) or where the proper officer is not satisfied with the clarification, information or documents furnished, he shall, for reasons to be recorded in writing, reject such application and inform the applicant electronically in FORM GST REG-05.
(5) If the proper officer fails to take any action.-
(a) within a period of three working days from the date of submission of the application; or
(b)within a period of seven working days from the date of the receipt of the clarification, information or documents furnished by the applicant under sub-rule
(2),
the application for grant of registration shall be deemed to have been approved.”
14. The provision contained in Rule 8(4) is unambiguous with regard to the documents required to be uploaded along with an application for registration. They are documents specified in Form GST REG-01 at the common portal. The list of documents to be uploaded is given at the end of this form.
15. Learned counsel for the first respondent contended that an applicant has obligation to upload only the documents specified in Form GST REG-01 and the authorities cannot require an applicant to upload any other document. This contention merits acceptance in view of the clear mandate given under Rule 8(4). Learned counsel for the first respondent contended that the documents required to be submitted as item No.2 in Ext.P8 notice are documents not specified in Form GST REG-01. The documents which were required to be submitted by the first respondent as item No.2 in Ext.P8 notice are not documents included in the list mentioned in the aforesaid form.
16. However, learned senior counsel for the appellants pointed out that, as per the application submitted by the first respondent, the business proposed to be conducted by it is sale of lottery tickets. Learned senior counsel would invite our attention to the provisions contained in the Lotteries Regulation Act, 1998 in this regard.
17. Section 3 of the Lotteries Regulation Act, 1998 provides that save as otherwise provided in Section 4, no State Government shall organise, conduct or promote any lottery. Section 4 of the Act specifies the conditions subject to which lotteries may be organised, conducted or promoted. One of the conditions specified in Section 4 is that the State Government shall sell the tickets either itself or through distributors or selling agents.
18. Learned senior counsel for the appellants would contend that since lottery tickets can be sold in the State only by the State Government itself or through distributors or selling agents, the State is entitled to know the details of the distributors or selling agents who apply for registration under the Act. Learned senior counsel would contend that, in view of the provision contained in Rule 9(2), the officer concerned is entitled to require the first respondent to produce additional documents and also information with regard to the lottery business proposed to be conducted by it.
19. Rule 9(2) empowers the proper officer to electronically issue a notice to the applicant in the prescribed form requiring the applicant to furnish clarification, information or documents. Rule 9(2) has two limbs which deal with two circumstances under which the proper officer has the power to issue such a notice. The first circumstance is where the application submitted under Rule 8 is found to be deficient, either in terms of any information or any document required to be furnished under that rule. The documents required to be produced in terms of the first limb of Rule 9(2) are restricted to documents required to be furnished under Rule 8(4) which had not been already furnished by the applicant along with the application and no other document. In the instant case, the first respondent was required to furnish the documents shown as item No.2 in Ext.P8 notice to prove that he was authorised to deal with lottery tickets under various statutes. The documents so required to be produced were not documents required to be furnished under Rule 8(4). Therefore, the first limb of Rule 9(2) has no application to the instant case. The proper officer had no power to require the first respondent to produce the documents shown as item No.2 in Ext.P8 notice.
20. The second limb of Rule 9(2) provides that, where the proper officer requires any clarification with regard to any information provided in the application submitted under Rule 8 or documents furnished therewith, he may issue notice to the applicant seeking such clarification. Under the second limb of Rule 9(2), the proper officer has no power to require the applicant to furnish or produce any document. The second limb only deals with seeking clarification. The proper officer has power only to require the applicant to furnish clarification with regard to any information or document furnished along with the application submitted under Rule 8(4).
21. Thus, a close scrutiny of the provision contained in Rule 9(2) would show that, neither under the first limb nor under the second limb of Rule 9(2), the proper officer had power to require the first respondent to produce the documents enumerated as item No.2 in Ext.P8 notice.
22. Learned senior counsel for the appellants contended that the authority concerned is empowered under Rule 9(2) to require the applicant to furnish clarification on any information provided or documents furnished along with the application submitted under Rule 8(4). There can be no quarrel with this proposition. But, such clarification cannot be in the form or nature of any document. Furnishing clarification cannot be demanded in the form of production of documents. In the instant case, the first respondent proposes to conduct sale of lottery tickets. Then, the officer concerned has power under Rule 9(2) to seek clarification from the first respondent on any information furnished or documents produced under Rule 8(4) with regard to conduct of lottery business.
23. Learned counsel for the first respondent contended that it is only when there is non-compliance with Rule 8 that the proper officer can seek clarification on information or documents furnished along with the application for registration. Learned counsel would point out that the expression “clarification” is defined in the explanation appended to Rule 9(2).
24. There is no merit in the aforesaid contention. The explanation provided to Rule 9(2) is not exhaustive. It only provides that clarification includes modification or correction of particulars required in the application for registration. It does not mean that no other clarification can be sought in respect of information furnished or documents produced along with the application for registration.
25. Learned counsel for the first respondent has invited our attention to the judgment of a learned Single Judge of this Court in W.P.(C) No.27158/2017 in which it has been held that the officials under the tax department have no power to enter into satisfaction as to whether lottery is conducted in compliance with the Lotteries Regulation Act or not. We have perused this judgment. We see nothing in this judgment which restricts or prohibits the power of the proper officer under Rule 9(2) to seek clarification as provided under that provision.
26. The upshot of the discussion above is that, the officer concerned is empowered under Rule 9(2) to issue notice to a person who has filed application for registration under Rule 8 to furnish clarification with regard to any information provided in that application or documents furnished therewith. Such clarification may include information to ascertain the legality of the business proposed to be conducted by the applicant but it does not include furnishing of any documents other than the documents required to be uploaded under Rule 8(4).
27. In the aforesaid circumstances, the direction contained in the impugned judgment requires modification as follows: The application, which may be submitted by the first respondent afresh, shall be considered by the appellants de hors the documents mentioned under item No.2 in Ext.P8 notice. However, on verification of such application, if it is found to be deficient in terms of any document required to be furnished under Rule 8(4), the proper officer is entitled to require the first respondent to furnish such document. The authority concerned is also entitled to seek clarification with regard to any information provided in the application or documents furnished therewith. But, such clarification shall not be required to be furnished in the form of any document. It is ordered accordingly. No costs in the appeal.
