There is no law which mandates a businessman to always retain stock at the place of business for valid GST registration.
Introduction: The cancellation of GST registration carries profound consequences, affecting a citizen’s fundamental right to engage in lawful business activities. Under Section 29(2) of the U.P. Goods and Services Tax Act, 2017, specific conditions warranting registration cancellation are outlined. This article delves into a case study, where M/S Shree Ram Glass challenged the cancellation order, offering insights into legal defenses, nuances, and considerations in such disputes.
Cancellation of registration has serious consequences, it takes away the fundamental right of a citizen etc. to engage in a lawful business activity.
Cancellation of registration can take place where only condition provided under Section 29 sub clause 2 of the Act of 2017 are fulfilled stated as follows:
“(2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,-
(a) a registered person has contravened such provisions of the Act or the rules made there under as may be prescribed; or
(b) a person paying tax under section 10 has not furnished returns for three consecutive tax periods; or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or
(d) any person who has taken voluntary registration under subsection (3) of section 25 has not commenced business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, willful misstatement or suppression of facts: Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard.
[PROVIDED FURTHER, that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed.]”
M/S Shree Ram Glass Bachauli Kuftabad Beekapur Thru. Partner Shree Aman Jaiswal challenged the order of cancellation of registration under U.P. Goods and Services Tax Act, 2017 vide order dated 1.6.2023 as well as rejection of the application for revocation vide order dated 2.9.2023 and also rejection of his appeal against both the aforesaid orders by means of order dated 30.11.2023 before Hon’ble Allahabad High court vide Writ – C No. – 1346 of 2024
It has been submitted that Petitioner is a partnership firm engaged in the business of trade of glass and glass sheets. The firm was transacting business and filing its returns. GST returns pertaining to financial years 2021-22 and 2022-23 have been filed and tax on the same has been paid by the petitioner. Registration of the petitioner was cancelled on the basis that petitioner does not conduct any business at the declared place of business and does not respond to any show cause notice issued to him. On further inspection of the premises it was found that there was no stock maintained at the place of business and the signatures of the landlord did not tally with the rent agreement submitted during the inspection.
Held
Considering the provisions under Section 29(2) along with facts of the case, there is no denial of the fact that petitioner has conducted business as the returns filed for the financial years 2021-22 and 2022-23 have been filed and this fact has not been denied by any authority.
Since the registration has been granted by the respondent authority, it is presumed that it has been granted after due verification of necessary facts. If the respondents propose to cancel the registration, a heavy burden lay on the respondent to see that the conditions under Section 29(2) for the purpose of cancellation are fulfilled.
Conclusion : Merely because at the place of business no stock was found it was concluded that the petitioner did not conduct any business activity. There is no law which mandates a businessman to always retain stock at the place of business. To come to such a conclusion the authorities should have undertaken further exercise to indicate that the returns filed by the assessee themselves were fraudulently filed only to claim Input Tax Credit. The authorities have failed to discharge the duties and merely because the place of business did not contain any stock the registration of the petitioner was cancelled.
It is in aforesaid circumstances that Hon’ble Court is of the considered opinion that both the impugned orders are illegal and arbitrary and accordingly set aside.
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