Case Law Details
Chiranjib Ghosh and another Vs Assistant Commissioner (Calcutta High Court)
In the matter of Chiranjib Ghosh and Another Vs. Assistant Commissioner before the Calcutta High Court, the court reviewed the decision to cancel the GST registration of a partnership firm, Shiv Shankar Trade Co. The firm’s registration under the West Bengal GST/CGST Act, 2017 was cancelled by an order dated March 8, 2021. The case presented before the High Court focused on whether this cancellation was justified given the petitioners’ responses to the show cause notice issued to them.
Background and Proceedings
The petitioners, partners of Shiv Shankar Trade Co., challenged the cancellation order on the grounds that it was made without adequately considering their response to the show cause notice. The cancellation notice was issued on January 27, 2021, citing reasons related to alleged fraud and misstatement in the firm’s registration.
Upon receiving the notice, the petitioners responded on February 4, 2021, requesting further details about the allegations. On February 5, 2021, the Assistant Commissioner provided additional documentation related to the show cause notice. The petitioners, in turn, submitted further evidence and explanations on February 9, 2021.
Despite these submissions, the Proper Officer cancelled the registration on March 8, 2021, claiming that the petitioners had failed to respond adequately and had provided false information about their business premises. The cancellation order was based on the assertion that the petitioners did not comply with the notice and failed to provide a valid rent agreement.
Legal Arguments and Court’s Analysis
The petitioners contended that the cancellation order was unjust because it did not take into account their response submitted on February 9, 2021. They argued that the decision to cancel the registration was made in a mechanical and unfair manner, without proper consideration of their provided evidence.
The court found merit in the petitioners’ argument. It was evident from the records that the Proper Officer’s order proceeded on the incorrect assumption that the petitioners had not responded to the show cause notice. The court noted that the response provided by the petitioners was not duly considered before passing the cancellation order. Consequently, the court deemed the order as mechanical and perverse.
Court’s Directions
In light of these observations, the Calcutta High Court set aside the cancellation order. The case was remanded back to the Proper Officer for reconsideration. The Proper Officer was instructed to review the petitioners’ response and all relevant documents afresh and provide a fair hearing to the petitioners.
The court also allowed the petitioners to raise all relevant legal points, including issues of non-compliance with the West Bengal GST Rules. Furthermore, the petitioners were granted the right to apply for revocation of the suspension of their registration. The Proper Officer was directed to address such applications promptly, within four weeks of their submission.
The court emphasized that the reconsideration of the show cause notice should be completed within six weeks from the date of communication of this order. This timeline was set to ensure a swift and fair resolution of the matter.
Conclusion
The Calcutta High Court’s decision in Chiranjib Ghosh and Another Vs. Assistant Commissioner underscores the importance of fair administrative processes and the need for thorough consideration of all responses before making significant decisions such as the cancellation of GST registration
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1. Mr. Das, learned Advocate appearing on behalf of the petitioners, on instruction, submit that the petitioners do not want to press prayers (a) and (b).
2. The petition is, thus, confined to the challenge to the order dated 8th March, 2021, cancelling the petitioners‟ registration under the West Bengal GST/CGST Act, 2017 (hereinafter referred to as „the said Act‟).
3. It is petitioners‟ case that the petitioners are the partners of a partnership firm, namely, Shiv Shankar Trade Co. (unregistered) (in short the “firm”) and the Registration under the said Act had been obtained in the name of the said firm.
4. According to the petitioners, the said firm at all material time carried on business from 11, Baikuntha Sen Lane, Kolkata-700007.
5. On or about 27th January, 2021 a show cause notice was served on the petitioners calling upon the petitioners to show cause as to why the registration of Shiv Shankar Trade Company shall not be cancelled for the following reason:
1. “In case, Registration has been obtained by means of fraud, willful misstatement or suppression of facts”.
6. The petitioners as partners of the said firm had duly responded to the said notice by communication dated 4th February, 2021 and had called upon the respondents to disclose the basis on which the said notice had been issued.
7. The records reveal that by a communication in writing dated 5th February, 2021 the Assistant Commissioner of Revenue had informed the petitioners that an attachment was forwarded to the petitioners along with the show cause notice. For the reference of the petitioners the said attachment was once again forwarded along with the said communication.
8. It appears that upon receipt of such communication, the petitioners by a letter dated 9th February, 2021 had offered an additional response and had submitted several documents in support of its contention. Particulars of such documents would appear from the aforesaid communication.
9. Incidentally by an order dated 8th March, 2021 the Proper Officer cancelled the said firm‟s registration, inter alia, recording as follows:
“The RTP fails to reply the SCN.
The RTP fails to make his presence every time on the spot enquiry made, the rent agreement furnished by RTP is false and without signature of the landlord. The landlord decline to accept or recognise the RTP as his teneant whenever the on the spot enquiry made.”
10. Das appearing on behalf of the petitioners, by drawing attention of this court to the show cause notice, the response given by the petitioners on 9th February, 2021 and the order of cancellation dated 8th March, 2021 submits that the cancellation has been effected by non-consideration of the petitioners‟ response.
11. It is submitted that although, the coordinate Bench of this court by an order dated 4th August, 2022 had permitted the respondents to file an affidavit-inopposition, till date no affidavit-in-opposition has been In the circumstances as noted hereinabove the order dated 8th March, 2021 which is otherwise unsustainable in law should be set aside and the petitioners‟ registration should be restored.
12. Ray learned Government Pleader submits that all particulars in connection with the show cause notice had been disclosed. The petitioners were given due opportunity of hearing and thereafter, the aforesaid order has been passed. It is submitted that in the facts noted above, no interference is called for.
13. Heard the learned Advocates appearing on behalf of the respective parties and considered the materials on record. In this case it would appear that a show cause notice was issued on 27th January, 2021 calling upon the said firm to show cause why the registration under the said Act shall not be cancelled on the ground indicated therein.
14. Although, initially, it was claimed on behalf of the said firm that the basis on which the aforesaid show cause notice had been issued had not been disclosed, however, subsequent to the Proper Officer by communication dated 5th February, 2021 clarifying the position and once again by enclosing the documents as an attachment had forwarded the same to the petitioners, the said firm though the petitioners had filed its response dated 9th February, 2021.
15. The records, however, reveals that by an order dated 8th March, 2021 the Proper Officer under the said Act by proceeding on the premise that the said firm had failed to reply to the show cause notice had cancelled the firm’s registration.
16. The aforesaid order appears to have been passed without taking into consideration the response given by the petitioners on 9th February, 2021. The aforesaid order dated 8th March, 2021, thus, appears to be mechanical and is perverse. In view thereof, the same is set aside.
17. The matter is remanded back to the Proper Officer for reconsideration of the firm‟s case by taking note of the response given by the petitioners and to decide the same upon giving an opportunity of hearing to the petitioners.
18. It shall be open to the petitioners to raise all points as may be available to them in law, inter alia, including non-compliance of the provisions of Rule 25 of the West Bengal Goods and Services Tax Rules, 2017.
19. The petitioners shall also be at liberty to apply before the Proper Officer for revocation of the order of suspension of registration issued under Rule 21A of the said Act. If such an application is made, the Proper Officer shall dispose of the same as expeditiously as possible not later than four weeks from the date of filing such application.
20. The Proper Officer shall also dispose of the reconsideration of the firm’s show cause notice in the light of the observations made herein within a period not later than six weeks from the date of communication of this order.
21. With the aforesaid directions, writ petition stands disposed of.
22. There shall be no order as to costs.
23. Urgent Photostat certified copy of this order, if applied for, be made available to the parties upon compliance with the necessary formalities.
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