GST registration cancellation for non-filing returns challenged; department directed to consider SMS notifications in regional languages

The HC disposed of writ petitions challenging GST registration cancellation for non-filing returns and rejection of time-barred appeals. The court noted that keeping small-scale entrepreneurs out of GST regime serves no useful purpose as they continue business operations. The HC emphasized that many small traders, including carpenters, electricians, and fabricators, are uneducated and unfamiliar with email technology despite providing email IDs through agents during registration. The court criticized the department's notice system as ineffective, stating cancellation amounts to "capital punishment" for traders, potentially destroying businesses built over years. The HC directed the GST department to consider amending provisions and implementing SMS notifications in regional languages to better serve small entrepreneurs.

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Issues Involved:

1. Cancellation of GST registration due to non-filing of returns.
2. Rejection of appeal on grounds of limitation.
3. Impact on the petitioner's right to livelihood and trade.
4. Interpretation of GST provisions in light of constitutional rights.
5. Procedural fairness and communication by the GST department.

Detailed Analysis:

1. Cancellation of GST Registration Due to Non-Filing of Returns:

The petitioner, a small hotel owner, faced cancellation of his GST registration for failing to file returns over a continuous period of six months. The petitioner attributed this failure to financial crises and unforeseen circumstances but later filed the returns with penalties and interest. The cancellation was executed in accordance with the GST Act, which mandates such action for non-compliance. The court acknowledged the procedural adherence by the department, including the issuance of a show-cause notice, and the petitioner's subsequent response.

2. Rejection of Appeal on Grounds of Limitation:

The petitioner's appeal against the cancellation was dismissed by the department due to being time-barred. The statutory period for filing an appeal under the GST Act is 90 days, which the petitioner exceeded. The court noted that while the Deputy Commissioner of State Tax lacks the authority to condone delays beyond 30 days, the strict application of limitation periods can leave individuals without remedy, particularly in exceptional circumstances like the pandemic.

3. Impact on the Petitioner's Right to Livelihood and Trade:

The court highlighted the severe impact of GST registration cancellation on the petitioner's livelihood, referencing similar judgments from the Bombay High Court and Uttarakhand High Court. The denial of GST registration affects the petitioner's ability to conduct business, thereby infringing on his constitutional right to livelihood under Article 21 and the right to trade under Article 19(1)(g). The court emphasized that the GST provisions should not be interpreted to deny these fundamental rights.

4. Interpretation of GST Provisions in Light of Constitutional Rights:

The judgment drew parallels with other cases where courts exercised their jurisdiction under Article 226 of the Constitution to address grievances stemming from GST registration cancellations. The court underscored that constitutional guarantees must be enforced, and the GST enactment should facilitate rather than hinder trade. The court referenced the Supreme Court's stance that constitutional remedies cannot be curtailed by statutory provisions, advocating for a balanced approach that respects legislative intent while safeguarding fundamental rights.

5. Procedural Fairness and Communication by the GST Department:

The court criticized the current communication methods employed by the GST department, which may not effectively reach small-scale traders who are often unaccustomed to digital communications. The judgment suggested that notices should be issued in regional languages and through SMS to ensure better accessibility and understanding. The court urged the department to consider amending relevant provisions to prevent undue hardships on traders due to procedural technicalities.

Conclusion:

The writ petition was disposed of in line with the guidelines established in the Suguna Cutpiece case, emphasizing the need for procedural flexibility and the protection of constitutional rights. The court called for the GST department to revise its practices to better support small-scale entrepreneurs and uphold their right to trade and livelihood.

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