FACTS OF THE CASE

  • The petitioner, M/s Sun Light Enterprise, is a partnership firm engaged in the business of executing works contracts and holds a mandatory GST registration.
  • Due to circumstances beyond the firm’s control, specifically including the severe disruptions caused by the COVID-19 pandemic, the petitioner failed to file its GST returns regularly.
  • Consequently, the Goods and Services Tax Department issued a Show Cause Notice dated 04/01/2021 proposing the cancellation of the petitioner's GST registration.
  • Shortly thereafter, the department issued an impugned order dated 02/02/2021 cancelling the petitioner's GST registration.
  • Although the petitioner preferred a statutory appeal against the order dated 02/02/2021, the appeal remained pending before the Appellate Authority.
  • Due to the prolonged suspension and cancellation of registration, the petitioner’s core business operations were severely affected, prompting them to file a Writ Petition (W.P.(C) No. 6429/2022) before the Hon’ble Gauhati High Court seeking urgent interim/final relief for restoration.

ISSUES INVOLVED

  1. Whether the cancellation of GST registration due to procedural default in filing returns during pandemic-like hardships can be revoked to allow business continuity.
  2. Whether a taxpayer can seek immediate restoration of GST registration by complying with statutory requirements under Rule 23 of the CGST Rules, 2017, even while an appeal is pending.

PETITIONER’S ARGUMENTS

  • The learned counsel for the petitioner, Mr. B. Chakraborty, argued that the non-filing of returns was not deliberate, but caused by legitimate factors beyond the firm's control, primarily the COVID-19 pandemic.
  • It was submitted that the cancellation of GST registration had brought the petitioner’s works contract business to a complete standstill, causing irreparable financial harm and business disruption.
  • The counsel asserted that the petitioner had already deposited all necessary dues. Furthermore, if any additional statutory dues remained payable, the petitioner was fully willing to discharge them in accordance with the law.
  • Therefore, an urgent judicial direction for the immediate restoration of the GST registration was prayed for.

RESPONDENT’S ARGUMENTS

  • The learned Standing Counsel for the GST Department, Mr. S.C. Keyal, appearing on behalf of the respondents, submitted instructions obtained from the department.
  • It was stated that the GST Department had no objection to revoking the cancellation of the petitioner's registration with immediate effect, provided the petitioner strictly complies with Rule 23 of the CGST Rules, 2017.
  • The condition for restoration was that the petitioner must file all up-to-date GST returns and clear the outstanding tax liability along with applicable statutory dues.

COURT ORDER AND FINDINGS

  • The Hon'ble Gauhati High Court (bench of Hon’ble Mr. Justice Suman Shyam), taking note of the mutual consent and pragmatic approach adopted by both parties, held that keeping the writ petition pending was unjustified.
  • Disposal Directive: The High Court disposed of the writ petition with a specific directive to the GST respondents to restore the GST registration of the petitioner immediately upon the filing of up-to-date returns and payment of statutory dues in accordance with the rules.
  • Time-Bound Compliance: To ensure smooth execution, Respondent No. 3 (Superintendent, GST, Bongaigaon-1) was ordered to intimate the petitioner regarding any outstanding statutory dues within 10 days from the order date, enabling the petitioner to deposit the amount and file returns expeditiously.

IMPORTANT CLARIFICATION

  • Pragmatic Approach over Technicalities: The judgment clarifies that revenue collection and compliance are the primary objectives of the GST law; stopping business operations via permanent cancellation when a taxpayer is willing to clear all dues counterproductively hampers business continuity.
  • Operational Relief under Rule 23: When a taxpayer demonstrates readiness to pay all accrued tax liabilities and interest, administrative machinery should facilitate prompt restoration rather than locking parties into prolonged appellate litigation.

SECTIONS INVOLVED

  • Rule 23 of the Central Goods and Services Tax (CGST) Rules, 2017: Revocation of cancellation of GST registration upon filing of pending returns and payment of tax/statutory dues.
  • Section 29 of the Central Goods and Services Tax (CGST) Act, 2017: Cancellation of GST registration due to non-filing of regular returns.
  • Article 226 of the Constitution of India: Writ jurisdiction invoked before the High Court for urgent relief against administrative inaction/pending appeal.

Link to download the order - https://mytaxexpert.co.in/uploads/1784626748_1865compressed.pdf

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