The Bombay High Court quashed the order dated 14-03-2022, by which the GST registration of the Petitioner was canceled. A division bench of this Court comprising Hon’ble Justice Mangesh S. Patil and S.G. Chapalgaonkar held that the provisions of GST enactment cannot be interpreted to deny the right to carry on Trade and Commerce to any citizen and subjects.
Brief Facts:
In this case, the Petitioner is a proprietary firm engaged in fabrication work registered under the Central Goods and Services Tax Act, 2017 (GST Act) and Maharashtra State Goods and Services Tax Act, 2017. The grievance of the Petitioner was that he had undergone angioplasty, and the firm suffered a financial setback in a pandemic, due to which GST returns from August 2021 could not be filed. The State Tax Officer, Aurangabad, issued a show cause notice dated 28-02-2022 calling upon the Petitioner to furnish his explanation within a period of 7 working days. The Petitioner replied to the show cause notice on 03-03-2022. However, the State Tax Officer vide order dated 14-03-2022 canceled the registration with effect from 21-08-2021.
The Petitioner requested for revocation of the cancellation of registration. The State Tax Officer rejected the application of Petitioner seeking revocation of cancellation vide order dated 17-05-2022. An appeal was filed against the order dated 17-05-2022 which was also rejected on the ground of limitation that the appeal had been submitted beyond the prescribed period provided under sections 107 (1) and 107 (4) of the MGST Act, 2017. Hence, this Petition was filed.
Contentions of the Petitioner:
The learned Counsel for the Petitioner submitted that due to the pandemic situation, the business activities of the Petitioner were hampered, causing huge financial loss. He further submitted that the Petitioner would not be able to continue his business without registration and would face starvation. Therefore, it was urged to this Court to exercise jurisdiction under Art. 226 of the Constitution of India to protect the fundamental right guaranteed under Art. 19 and 21 of the Constitution of India.
Contentions of the Respondents:
The learned Counsel for the Respondents submitted that the appellate authority had rightly dismissed the appeal, which was apparently barred by limitation. Also, the Petitioner has already availed statutory remedy. Hence, he is not entitled to invoke extraordinary jurisdiction of this Court under Art. 226 of the Constitution of India.
Observations of the Court:
This Court observed that small-scale industrialists and service providers like Petitioner lost their business for more than two years. The financial losses suffered during this time cannot be ignored, particularly when it comes to small-scale businesses and service providers. Therefore, in view of this Court, the provisions of GST enactment cannot be interpreted so as to deny the right to carry on Trade and Commerce to any citizen and subjects. The right to carry on trade or profession cannot be curtailed contrary to the constitutional guarantee under Art. 19(1)(g) and Article 21 of the Constitution of India. If a person like Petitioner is not allowed to revive the registration, the state would suffer the loss of revenue, and the ultimate goal under the GST regime will stand defeated. The bench further added that since it is merely a matter of cancellation of registration, the question of limitation should not bother since it cannot be said that any right has accrued to the state which would rather be adversely affected by the cancellation.
Applying the aforesaid guidelines to the facts of the present case, the Court found that the Petitioner, a small-scale entrepreneur, cannot carry on production activities without GST registration. Resultantly, his right to livelihood would be affected. Since his statutory appeal suffered dismissal on technical grounds, this cannot be allowed to continue.
The decision of the Court:
The Bombay High Court allowed the writ petition and quashed the order dated 14-03-2022 canceling GST registration of the petitioner passed by the State Tax Officer and the order dated 21-10-2022 passed by the Dy. Commissioner of Tax, Aurangabad.
Case Title: Rohit Enterprises Versus The Commissioner State GST Bhavan
Coram: Hon’ble Justice Mangesh S. Patil and S.G. Chapalgaonkar
Case no.: WRIT PETITION NO. 11833 OF 2022
Advocate for the Petitioner: Mr Alok Sharma
Advocate for the Respondents: Mr A.S. Shinde
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