Case Law Details
Mohd. Shahzar Vs State of Madhya Pradesh And Others (Madhya Pradesh High Court)
In the case of Mohd. Shahzar vs. State of Madhya Pradesh & Others, the Madhya Pradesh High Court addressed the cancellation of the petitioner’s GST registration. The petitioner, a proprietor of a business in Gwalior, cited adverse family circumstances as the reason for failing to file GST returns for the financial year 2022-23. The authorities initially issued show cause notices, followed by the cancellation of the registration in August 2023. An appeal against the cancellation was later dismissed in February 2024, prompting the petitioner to approach the High Court. He contended that he was not given adequate hearing opportunities to explain his reasons but expressed his willingness to file all pending returns and comply with penalties to reinstate his business operations.
The respondents argued that the petitioner was given sufficient opportunities under the GST Act and Rules, including hearings and notice issuance. However, the Court noted that the petitioner’s intention to return to compliance and contribute to the formal economy aligned with the department’s revenue interests.
The High Court set aside the orders canceling the registration and rejecting the appeal. It directed the petitioner to file all pending GST returns for the relevant period and pay a penalty of ₹50,000 as a condition for revocation. The authorities were instructed to consider the revocation application upon compliance. This decision underscores the judiciary’s approach to balancing regulatory enforcement with the need to support taxpayers in adverse situations, ensuring they rejoin the formal tax system while meeting their legal obligations.
FULL TEXT OF THE JUDGMENT/ORDER OF MADHYA PRADESH HIGH COURT
Heard finally with the consent of the parties.
2. Present petition is preferred under Article 226 of the Constitution of India taking exception to the order dated 29.02.2024 (Annexure P/1) passed by the Joint Commissioner (Appeal), whereby the appeal preferred by the appellant against the order dated 22.08.2023, whereby the application for revocation of cancellation was rejected, has been dismissed.
3. Precisely stated, facts of the case are that the petitioner is local resident of Gwalior and owner and proprietor of the firm namely; National Electric Electronics Telecom Contractor, Shiv Colony, Dabra. As alleged, due to some adverse family circumstances, the petitioner could not pay attention to his business and did not submit GST returns for the year 2022-23 within time frame, resulting into cancellation of his registration.
4. It is the grievance of the petitioner that sufficient opportunity of hearing was not given to the petitioner. If the hearing had been given, then he would have show caused his reason for non-submission of GST returns. However, he fairly submits that if cost is imposed and chance is given for revocation of registration and to start business again, then he would not be prejudicially affected and he would start his business again.
5. Learned counsel for the respondents referred different provisions viz. Section 25, 29 and 30 of the the Central Goods and Services Tax Act, 2017 and Rule 21 (a) and (h), Rules 22 and 23 of the Central Goods and Services Tax Rules, 2017 and submits that the petitioner was given sufficient opportunity of hearing. He may apply for fresh registration of case.
6. Heard learned counsel for the parties.
7. From the perusal of the documents attached with the petition, it appears that a show cause notice for cancellation of registration was issued by the department on 08.05.2023, in response to which reply was filed by the petitioner on 09.06.2023. Thereafter, another show cause notice was issued on 08.08.2023, in response to which order dated 22.08.2023 was passed, by which his registration was cancelled. When appeal was preferred, then appellate authority dismissed the appeal vide order dated 29.02.2024. Therefore, it is not a case where opportunity of hearing was not provided to the petitioner. It was very much provided but thereafter order was passed. However, question is that the petitioner is facing adversity and wants to go again into the main stream of tax regime, therefore, it would be in the interest of department/revenue also to take the petitioner into regular main stream as part of formal economy, so that he may conduct business while giving regular tax to the authority.
6. Therefore, the impugned orders dated 29.02.2024 (Annexure P/1) and dt.22.08.2023 (Annexure P/2) are hereby set aside and the petitioner is directed to submit all the pending GST returns specially for the period when the registration was cancelled and if such pending returns are submitted before the authority, then authority shall consider the case for revocation of registration. Since the petitioner committed default, therefore, he is liable to pay the cost of Rs.50,000/- (Rupees Fifty Thousand), which shall be paid to the department alongwith the pending GST returns. This order is passed in peculiar facts and circumstances of the case.
Petition stands allowed and disposed of in above terms.
Author Bio
