Kerala High Court
M/S. Riosis Private Limited vs The Superintendent on 17 October, 2024
Author: P Gopinath
Bench: P Gopinath
2024:KER:77625
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
THURSDAY, THE 17TH DAY OF OCTOBER 2024 / 25TH ASWINA, 1946
WP(C) NO. 17867 OF 2024
PETITIONER:
M/S. RIOSIS PRIVATE LIMITED,
32/1638/39,40,41, VAVAS MALL, CALICUT-OOTTY BYPASS
ROAD, PERINTHALMANNA, MALAPPURAM, REPRESENTED BY ITS
MANAGING DIRECTOR, RAJANEESH V., PIN - 679322.
BY ADVS.
R.SREEJITH
K.KRISHNA
ACHYUTH MENON
PADMANATHAN K.V.
RESPONDENTS:
1 THE SUPERINTENDENT,
CENTRAL TAX AND CENTRAL EXCISE, PERINTHALMANNA RANGE,
MALAPPURAM DIVISION, MALAPPURAM, PIN - 676505.
2 THE COMMISSIONER (APPEALS),
CENTRAL TAX, CENTRAL EXCISE AND CUSTOMS, CENTRAL
REVENUE BUILDING, I.S. PRESS ROAD, ERNAKULAM,
PIN - 682018.
BY ADV P.T.DINESH
SMT.JASMIN M M, GP
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
17.10.2024, ALONG WITH WP(C).20537/2024, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
WP(C) NOS.17867 AND 20537 OF 2024
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
THURSDAY, THE 17TH DAY OF OCTOBER 2024 / 25TH ASWINA, 1946
WP(C) NO. 20537 OF 2024
PETITIONER:
THANGAMANI PRABHAKARAN,
AGED 43 YEARS,
PROPRIETOR, M/S. VANCHIMALAYIL BUILDERS &
ENGINEERS, 9/457, MECHERI PARAMBIL BUILDING,
KALLISERRY JUNCTION, THIRUVANANDOOR, ALAPUZHA,
PIN - 689124.
BY ADVS.
R.SREEJITH
ACHYUTH MENON
PADMANATHAN K.V.
RESPONDENT:
THE SUPERINTENDENT,
CENTRAL TAX AND CENTRAL EXCISE, CHENGANNUR RANGE,
ALAPPUZHA DIVISION, ALAPPUZHA, PIN - 688011.
BY ADVS.
SRI. SREELAL N. WARRIER, SC, CENTRAL BOARD OF
EXCISE
SMT.JASMIN M M, GP
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 17.10.2024, ALONG WITH WP(C).17867/2024, THE COURT ON
THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) NOS.17867 AND 20537 OF 2024
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JUDGMENT
These writ petitions have been filed challenging the
cancellation of registration granted to the petitioners under the
provisions of the CGST / SGST Acts. While the petitioner in
W.P(C)No.17867 of 2024 filed an appeal against the order of
cancellation, which was rejected on the ground that it was belatedly
filed, the petitioner in W.P(C)No.20537 of 2024 has challenged the
order of cancellation directly in this Court.
2. The learned counsel appearing for the petitioners
would submit that while several contentions have been taken in these
writ petitions, the petitioners will be entitled to succeed on the basis
of the law laid down by this Court in judgment dated 22.12.2022 in
W.P(C)No.28783 of 2022, which was followed by this Court in
almost identical circumstances in the judgment dated in the same
day in W.P(C)No.29807 of 2022. It is submitted that in the facts of
these cases also, the show cause notice prior to cancellation of
registration was issued in Form REG-31, which is a form pertaining
to suspension of registration under Rule 21A of the CGST Rules. It is
submitted that cancellation of registration is dealt with in Rule 22 of
the CGST Rules and requires the issuance of show cause notice in
Form GST REG-17. The learned counsel appearing for the petitioners
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also placed reliance on the judgment of the Madras High Court in
MDR Enterprises v. Deputy Commissioner (ST) [(2024)165
taxmann.com 763 (Madras)] where the Madras High Court after
taking note of the fact that the appeal filed by the assessee in that
case had been rejected on the ground of delay directed restoration of
registration subject to certain conditions. It is submitted that no
prejudice or revenue loss will be caused to the respondents if the
registration of the petitioners in these cases is restored on the very
same conditions as set out in the judgment of the Madras High Court
in MDR Enterprises (supra). It is also submitted that the petitioners
may be entitled to the benefit of the Amnesty Scheme introduced by
notification No.03 of 2023-Central Tax dated 31.03.2023 issued by
the Central Board of Indirect Taxes and Customs. It is submitted that
the Madras High Court in Active Pest Control v. The Deputy
Commissioner and Others [MANU/TN/6564/2023] had taken the
view that even though the scheme in the notification referred to
above specifically relates to orders cancelling registration, which
were issued prior to 31.12.2022, the benefit of that notification can be
extended to others whose registration had been cancelled after the
cut off date of 31.12.2022 as well. It is submitted that in such
circumstances, the orders cancelling the registration of the
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petitioners may be set aside subject to such condition as this Court
may deem fit to impose.
3. Sri.Sreelal Warrier, the learned Senior Standing
Counsel for the respondents in W.P(C)No.20537 of 2024 and
Sri.P.T.Dinesh, the learned Standing Counsel appearing for the
respondents in W.P(C)No.17867 of 2024 would vehemently contend
that the petitioners are not entitled to any relief in these writ
petitions. It is submitted that the registration in both cases came to
be cancelled on account of gross default in complying with the
requirements of the law. It is submitted that there was failure to file
returns and pay taxes on time leading to issuance of the show cause
notice prior to cancellation of registration. It is submitted that
issuance of the notice in Form REG-31 has caused no prejudice
whatsoever to the petitioners as the reasons for cancellation had
been clearly spelt out in the show cause notice. It is submitted that
the purpose of a show cause notice is only to inform the noticee that
certain action is being taken on account of reasons set out in the
show cause notice. It is submitted that the show cause notices issued
to the petitioners in these cases clearly indicate as to why steps were
being taken to cancel their registration. It is submitted that there is
substantial compliance with the requirements of the law and the fact
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that the Form mentioned was Form REG-31 cannot in any way vitiate
the proceedings. Regarding the applicability of the scheme
introduced by the notification dated 31.03.2023 referred to above, it
is submitted that the provisions of an Amnesty Scheme like the one
offered in the said notification can be availed only if the petitioners
qualify under the terms of the scheme and there cannot be any
dilution of the scheme by order of court. It is submitted that though
the judgment of the Madras High Court in Active Pest Control
(supra) appears to take the view that even orders passed after
31.12.2022 are entitled to the benefit of the scheme introduced by
notification dated 31.03.2023, this Court should not follow the said
view as the view appears to be contrary to the well settled proposition
that benefits arising out of a scheme for Amnesty will be available to
an assessee only if he / she fully qualifies under the terms of the
scheme. It is submitted that the Appellate Authority had considered
the case of the petitioner in W.P(C)No.17867 of 2024 and had rightly
rejected the appeal on account of the fact that the appeal was highly
belated. It is submitted that this Court cannot in exercise of writ
jurisdiction to extend the statutory time limit for filing an appeal or
for filing an application for revocation under the provisions of
Section 29 of the CGST / SGST Acts.
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4. Having heard the learned counsel appearing for
the petitioners and the respective Standing Counsel appearing in the
individual writ petitions, I am of the view that the petitioners are
entitled to succeed on the basis of the law laid down by this Court in
the judgment in W.P (C) No.28783 of 2022, which was followed in
the judgment in W.P(C)No.29807 of 2022. A perusal of the judgment
of this Court in W.P(C)No.29807 of 2022 will indicate that it was a
case where a show cause notice has been issued alleging that there
was failure to furnish returns for a continuous period of six months.
This Court after considering the contentions raised by either side in
that case held as follows:-
4. Having heard the learned counsel for the
petitioner and the learned Senior Government Pleader for
respondents, I am of the view that this writ petition is
liable to be allowed. The show cause notice issued to the
petitioner in this case is produced as Ext.P1. A perusal of
Ext.P1 shows that the same has been issued in Form GST
Reg 31, which is the form for issuing a notice regarding
suspension of registration. That apart the reasons set out
in proposing cancellation of registration is as follows:
"Whereas on the basis of information which has
come to my notice, it appears that your registration is
liable to be cancelled for the following reasons:
Returns furnished by you under Section 39 of
the Central Goods and Services Tax Act, 2017
Observations
Failure to furnish returns for a continuous period of six months.
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You are hereby directed to furnish a reply to the
notice within thirty days from the date of service of notice."
The notice is absolutely vague and it is not clearly specified
with any clarity, the reasons for proposing cancellation even
the period for which there was alleged failure to file returns
is not specified. I have in my judgment in W.P (C)
No.28783/2022 held as follows:-
"5. Having heard the learned Senior Counsel for
the petitioner and the learned Senior Government Pleader
and Adv.Alfred, learned counsel appearing for the 2 nd
respondent, I am of the view that the petitioner is entitled
to succeed. The reasons which compel me to take such a
view are the following: -
(i) Ext.P5 show cause notice issued to the
petitioner has been issued in Form GST REG-31. That form
is to be issued in relation to proceedings for suspension of
registration and is issued with reference to Rule 21A of the
CGST/SGST Rules. It is clear that Form GST REG-31 is one
relatable to proceedings for suspension of registration and
cannot be treated as a show cause notice under Rule 21 of
the CGST Rules, which requires the issuance of a notice in
form GST REG-17. Ext.P5 does not even contain all the
details contemplated by the form appended to the Rules. A
reading of Ext.P5 suggests that the Officer issued the notice
in form GST REG31 by omitting specific details from the
form and by treating it as a notice for cancellation. It is a
principle at the heart of administrative law that where the
law requires a thing to be done in a particular manner, it
must be done in that manner alone. In Babu Verghese v.
Bar Council of Kerala, (1999) 3 SCC 422, it was held:-
"31. It is the basic principle of law long settled
that if the manner of doing a particular act is
prescribed under any statute, the act must be
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done in that manner or not at all. The origin of
this rule is traceable to the decision in Taylor v.
Taylor [(1875) 1 Ch D 426 : 45 LJCh 373] which
was followed by Lord Roche in Nazir Ahmad v.
King Emperor [(1936) 63 IA 372 : AIR 1936 PC
253] who stated as under: "
[W]here a power is given to do a certain thing in
a certain way, the thing must be done in that
way or not at all."
32. This rule has since been approved by this
Court in Rao Shiv Bahadur Singh v. State of V.P.
[AIR 1954 SC 322 : 1954 SCR 1098] and again in
Deep Chand v. State of Rajasthan [AIR 1961 SC
1527 : (1962) 1 SCR 662] . These cases were
considered by a three-Judge Bench of this Court
in State of U.P. v. Singhara Singh [AIR 1964 SC
358 : (1964) 1 SCWR 57] and the rule laid down
in Nazir Ahmad case [(1936) 63 IA 372 : AIR
1936 PC 253] was again upheld. This rule has
since been applied to the exercise of jurisdiction
by courts and has also been recognised as a
salutary principle of administrative law."
Therefore, the action taken by the officer by initiating
proceedings in form GST REG-31 of the CGST Rules and
completing the proceedings for cancellation of registration
by issuing Ext.P1 order is clearly without jurisdiction. If
the Officer wishes to initiate proceedings for cancellation
of registration, he must issue a notice as specified in Rule
21 of the CGST Rules and in form GST REG-17 and not in
form GST REG-31.
(ii) The Division Bench of the Gujarat High
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Court in Aggarwal Dyeing and Printing (Supra) has
considered an almost identical situation. The Court
considered the contents of the show cause notice issued in
that case and came to the conclusion that the show cause
notice was woefully inadequate inasmuch as it did not
specify the reasons which compelled the Officer to initiate
action for cancellation of registration. Even in the facts of
this case, the show cause notice (Ext.P.5) reads thus:-
"Show Cause Notice for Cancellation of Registration
Whereas on the basis of information which has
come to my notice, it appears that your registration
is liable to be cancelled for the following reasons:-
1. returns furnished by you under section 39 of the
Central Goods and Services Tax Act, 2017
Observations
Failure to furnish returns for a continuous period of
six months You are hereby directed to furnish a
reply to the notice within thirty days from the date
of service of this notice.
xx xx xx xx xx xx"
Apart from the fact that Ext.P.5 is issued in the wrong
form, it is also bad for the complete absence of any detail.
It is clearly vague and therefore the law laid down in the
judgments of the Gujarat High Court in Aggarwal Dyeing
and Printing (supra) and Sing Traders (supra) clearly
apply. I am in respectful agreement with the views
expressed in those decisions. The judgments of the
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Karnataka High Court and the Madhya Pradesh High
Court relied on by the learned Senior Government Pleader
appear to have been handed down in completely different
fact situations. I am also not inclined to follow the law laid
down by the Court in those judgments;
(iii) The contention taken by the learned
Government Pleader that since the Court deals with fiscal
legislations, the law must be strictly interpreted in favour
of the revenue is not a principle that applies to the
situation that this Court is concerned. The Constitution
Bench of the Supreme Court in Commissioner of Customs
(Import), Mumbai v. Dilip Kumar and Company and
others; (2018) 9 SCC 1; held that provisions of a taxing
statute have to be strictly construed in favour of the
assessee in the event of doubt or ambiguity while
exemption notifications granting concessions or
exemptions have to be generally interpreted in favour of
the revenue, again in the case of ambiguity. However, the
Supreme Court in Government of Government of Kerala
and another v. Mother Superior Adoration Convent;
(2021) 5 SCC 602 has taken the view that where
concessions or exemptions are granted with a specific
purpose of promoting or encouraging a certain activity the
principle that such concessions/exemptions must be
interpreted in favour of the revenue does not apply. In the
facts of these cases, this Court is concerned with the
provisions of Sections 29/30 of CGST/SGST which gives to
the power to cancel registration and also to revoke it.
These are not provisions which need to be interpreted with
reference to the principles laid down in the Dilip Kumar
(supra) and in Mother Superior Adoration Convent."
For the above reasons, the writ petition is
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allowed. Ext.P2 stands quashed. The quashing of the
impugned order of cancellation will not have the effect of
absolving the petitioner of any fiscal liability. The
petitioner will be required to file all defaulted returns
together with tax, late fee, interest, penalty etc., within a
period of two weeks from the date on which the
registration of the petitioner is restored in compliance
with this judgment.
Any other contentions taken in the writ petition
are left open."
5. A perusal of the show cause notices issued
(Ext.P1) in both the cases indicate that the show cause notices were
issued in Form REG-31 instead of Form REG-17 as required by the
provisions of the CGST Rules. While the learned Standing counsel
may be right in contending that the same cannot be said to have
caused any prejudice to the petitioners on the principles which lead
this Court to take the decision in W.P (C) No.28783 of 2022, which
was followed by the judgment in W.P(C)No.29807 of 2022, I am
inclined to allow these writ petitions. However, after perusing the
judgment of the Madras High Court in MDR Enterprises (supra) , I
am of the view that the conditions prescribed by the Madras High
Court while restoring the registration of the petitioner in that case
should be imposed in this case also.
6. Accordingly these writ petitions are disposed of in
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the following manner:-
Exts.P2 and P3 orders in W.P(C)No.17867 of 2024 and
Ext.P2 order in W.P(C)No.20537 of 2024 will stand quashed subject
to the same conditions set out in paragraph 5 of the judgment of the
Madras High Court in MDR Enterprises (supra), which is extracted
below for easy reference:-
i. The petitioner is directed to file returns for the period prior to
the cancellation of registration, together with tax dues along
with interest thereon and the fee fixed for belated filing of
returns within a period of forty five (45) days from the date of
receipt of a copy of this order.
ii. It is made clear that such payment of tax, interest, fine / fee
and etc. shall not be allowed to be made or adjusted from and
out of any Input Tax Credit which may be lying unutilized or
unclaimed in the hands of the petitioner.
iii. If any Input Tax Credit has remained unutilized, it shall not
be utilised until it is scrutinized and approved by an appropriate
or competent officer of the Department.
iv. Only such approved Input Tax Credit shall be allowed to be
utilized thereafter for discharging future tax liability under the
Act and Rules.
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v. The petitioner shall also pay GST and file the returns for the
period subsequent to the cancellation of the registration by
declaring the correct value of supplies.
vi. If any Input Tax Credit was earned, it shall be allowed to be
utilised only after scrutinising and approving by the respondents
or any other competent authority.
vii. On payment of tax, penalty and uploading of returns, the
registration shall stand revived forthwith.
viii. The respondents shall take suitable steps by instructing GST
Network, New Delhi to make suitable changes in the
architecture of the GST Web portal to allow the petitioner to file
the returns and to pay the tax / penalty / fine.
ix. The above exercise shall be carried out by the respondents
within a period of thirty (30) days from the date of receipt of a
copy of this order.
Writ petitions are ordered accordingly.
Sd/-
GOPINATH P.
JUDGE
DK
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APPENDIX OF WP(C) 20537/2024
PETITIONER EXHIBITS
Exhibit P1 COPY OF SHOW CAUSE NOTICE ISSUED BY THE
RESPONDENT DTD. 14-09-2022
Exhibit P2 COPY OF ORDER FOR CANCELLATION OF
REGISTRATION ISSUED BY THE RESPONDENT
DTD. 28-04-2023
Exhibit P3 COPY OF NOTIFICATION NO. 3/2023-CR
ISSUED BY MINISTRY OF FINANCE, NEW DELHI
DTD. 31-03-2023
Exhibit P4 COPY OF NOTIFICATION NO. 23/2023-CR
ISSUED BY MINISTRY OF FINANCE, NEW DELHI
DTD. 17-07-2023
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APPENDIX OF WP(C) 17867/2024
PETITIONER EXHIBITS
Exhibit P1 COPY OF SHOW CAUSE NOTICE ISSUED BY
JURISDICTION OFFICER, SERVICE TAX
NETWORK DTD. 14-09-2022
Exhibit P2 COPY OF ORDER ISSUED BY THE 1ST
RESPONDENT DTD. 20-01-2023
Exhibit P3 COPY OF ORDER-IN-APPEAL PASSED BY THE
2ND RESPONDENT DTD. 11-10-2023
Exhibit P4 COPY OF NOTIFICATION NO. 03/2023-CT
ISSUED BY GOVERNMENT OF INDIA, MINISTRY
OF FINANCE, NEW DELHI DTD. 31-03-2023
Exhibit P5 COPY OF NOTIFICATION NO. 23/2023-CT
ISSUED BY GOVERNMENT OF INDIA, MINISTRY
OF FINANCE, NEW DELHI DTD. 17-07-2023
