Tax Registration Saved: Non-Compliance Challenged but Cancellation Overturned with Conditional Compliance Window for Return Filing

HC found the tax registration cancellation disproportionate. While acknowledging non-compliance with filing returns, the court set aside the cancellation order, conditionally allowing petitioner to file pending returns and pay applicable taxes, interest, and penalties within four weeks. Failure to comply would result in dismissal of the writ petition. The court directed portal reactivation and urged a pragmatic resolution.

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Issues:
Challenge to cancellation of registration under Central/West Bengal Goods and Services Tax Act, 2017.

Analysis:
The petitioner filed a writ application challenging the cancellation of their registration under the Central/West Bengal Goods and Services Tax Act, 2017. The petitioner was served a notice for failing to file returns for six months, leading to the cancellation of registration. The petitioner's advocate argued that the petitioner intended to comply with the Act but failed to respond to the notice. Referring to a previous judgment, the advocate requested the cancellation order to be set aside upon fulfilling certain conditions. On the other hand, the State's advocate contended that the cancellation was justified as the petitioner did not comply with statutory provisions and failed to respond to the show cause notice.

The court noted that the cancellation was due to non-filing of returns, not tax evasion. Recognizing that suspending the registration would hinder business operations and tax recovery, the court urged a pragmatic approach. It was observed that without filed returns, the final tax liability couldn't be determined. Citing a previous judgment, the court decided to set aside the cancellation order subject to the condition that the petitioner files returns for the default period and pays the necessary tax, interest, fine, and penalty within four weeks. Failure to comply would result in the dismissal of the writ petition.

The court directed the respondents to activate the portal promptly for the petitioner to fulfill the conditions. The judgment concluded by disposing of the writ petition without any costs, instructing all parties to act based on the official copy of the order downloaded from the court's website. Additionally, it allowed the parties to obtain a certified copy of the order upon completing the necessary formalities.

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