2024 (9) TMI 1576 - HC - GST

HC restores GST registration despite time-barred appeal, emphasizes livelihood rights over technical limitations for small entrepreneurs

The HC allowed the writ petition challenging cancellation of GSTN registration despite the appeal being time-barred under the 90-day statutory limitation ... Cancellation of the petitioner's GSTN Registration - time limitation - appeal was not entertained in view of the statutory limitation period prescribed under GST Act, 2017 - HELD THAT:- The petitioner is a contractor doing contract works for the Government and its agencies and enrolled under the central Goods and Service Tax Act, 2017. The petitioner has been provided with GSTN Registration No. 33AAZPE3354N1Z7 The impugned order has been passed cancelling his registration under the GST Act due to non filing of the returns for a period of six months. The petitioner claims that though he had handed over the documents to his accountant, the accountant had not filed the returns in time. Since the petitioner was not aware of the impugned proceedings, he could not file the appeal within the statutory period. The respondent claims that the Statue prescribes specific limitation period of 90 days to file an appeal. A similar issue has been dealt with by a Hon'ble Division Bench of Bombay High Court [2023 (2) TMI 759 - BOMBAY HIGH COURT], wherein it has been held that 'Since it is merely a matter of cancellation of registration, the question of limitation should not bother us since it cannot be said that any right has accrued to the State which would rather be adversely affected by cancellation.' The Central Goods and Service Act was enacted in the year 2017 with an object of levy and collection of tax on intra state supply of goods or services or both by the Central Government. It is not the interest of the government to curtail the right of the entrepreneurs like the petitioner. The petitioner must be allowed to continue his business and to contribute to the State's revenue. In the absence of GST Registration number, a professional cannot raise a bill. If the petitioner is denied a GST registration number, it affects his chances of getting employment or executing works, which ultimately affects his livelihood embodied under Article 21 of the Constitution. The petitioner in this case is a contractor doing contractual works for the Government and its agencies. Most of the small scale entrepreneurs like carpenters, electricians, fabricators etc. are almost uneducated and they are not accustomed with handling of e-mails and other advance technologies - the uneducated traders can also respond to these notices atleast to some extent. Otherwise, these notices will be an empty formality and will not serve any purpose, for which it has been issued. The object of any Government is to promote the trade and not to curtail the same. The method adopted by the department as on today is like strangulating the neck of the small scale entrepreneurs. The cancellation of registration certainly, amounts to a capital punishment so for as the traders are concerned - the department of GST has to think of the consequences and relax the rules and also find the modalities of conveying the show cause notice by way of SMS and also in the regional languages. This court expects the department of GST to take appropriate action by amending the relevant provisions considering the consequences on traders. These writ petitions are disposed of. Issues Involved:1. Cancellation of GST Registration2. Non-filing of GST Returns3. Statutory Limitation for Appeals4. Right to Livelihood under Article 21 of the Constitution5. Procedural Fairness and Communication in GST NoticesDetailed Analysis:1. Cancellation of GST Registration:The petitioner, a contractor executing works for the Government, had his GST registration (No. 33AAZPE3354N1Z7) cancelled by the respondent due to non-filing of returns for six months. The petitioner argued that the failure was due to his accountant not filing the returns timely, and he was unaware of the proceedings, thus missing the appeal window.2. Non-filing of GST Returns:The petitioner claimed that he was under the bona fide belief that his accountant was handling the GST returns. The respondent countered that the petitioner was given sufficient opportunities to respond to the show cause notice issued on 15.07.2022 but failed to do so, leading to the cancellation of his registration.3. Statutory Limitation for Appeals:The petitioner could not file an appeal within the statutory limitation period prescribed under Section 107(4) of the GST Act. The respondent emphasized that the statute prescribes a specific limitation period of 90 days for filing an appeal, which the petitioner failed to meet.4. Right to Livelihood under Article 21 of the Constitution:The court referenced a similar case dealt with by the Bombay High Court, highlighting that the right to carry on trade or profession is protected under Article 19(1)(g) and Article 21 of the Constitution. The court noted that the stringent provisions of the GST Act should not deny a citizen's right to livelihood, especially in unique circumstances like health issues or the pandemic.5. Procedural Fairness and Communication in GST Notices:The court observed that many small-scale entrepreneurs are not well-versed with handling emails and advanced technologies. It suggested that the GST department should consider issuing notices in regional languages and through SMS to ensure better communication with traders who might otherwise miss critical information due to language barriers or unfamiliarity with digital communication.Conclusion:The court disposed of the writ petition in terms of the guidelines provided in the Suguna Cutpiece case. It emphasized that the GST department should take appropriate actions to amend relevant provisions to consider the consequences on traders and ensure procedural fairness. The registry was directed to mark a copy of the order to the Principal Chief Commissioner of GST & Central Excise, Tamil Nadu & Puducherry.