Facts of the Case

The petitioner, Parveez Ahmad Baba, challenged multiple actions relating to the operation of Samci Restaurant, Srinagar, including:

  • Grant of an FSSAI licence in favour of Respondent No. 5.
  • Communication issued by the Food Safety Authority stating that the licence related to the restaurant premises and suggesting inclusion of the petitioner as the person in charge of operations.
  • Cancellation of the petitioner's GST registration and issuance of a fresh GST registration in favour of Respondent No. 5.

The petitioner contended that although the restaurant premises were jointly purchased with his brother (Respondent No. 5), he alone had established, financed, managed and operated the restaurant for several years. He relied upon earlier municipal licences, tourism registration, bank loan documents, VAT registration, GST registration and utility payments to establish exclusive control over the business.

He further alleged that Respondent No. 5, in collusion with government officials, fraudulently secured an FSSAI licence and manipulated the GST portal to cancel his GST registration without his consent.

Respondent No. 5 denied these allegations and asserted that the restaurant premises were jointly owned and that he had independently applied for a fresh licence after fulfilling all statutory requirements. He maintained that no licence had been transferred from the petitioner and that he was legally operating the restaurant.

Issues Involved

  1. Whether an FSSAI licence could be exclusively granted in favour of one co-owner where ownership and possession of the restaurant premises were disputed.
  2. Whether the licence issued in favour of Respondent No. 5 amounted to an unlawful transfer of the petitioner's licence.
  3. Whether GST registration could validly remain in favour of only one party when entitlement to operate the business itself was under dispute.
  4. Whether the High Court should interfere with the actions of the licensing authorities.

Petitioner's Arguments

The petitioner submitted that:

  • He was the sole proprietor and actual operator of Samci Restaurant for several years.
  • Respondent No. 5 had fraudulently obtained the FSSAI licence without legal authority.
  • The Food Safety and Standards Act, 2006 does not permit transfer of an existing food licence from one person to another.
  • The licence was issued without providing him an opportunity of hearing.
  • Respondent No. 5 unlawfully accessed his electronic credentials and secured cancellation of his GST registration.
  • The GST authorities failed to investigate the alleged fraud despite repeated complaints.
  • His earlier registrations, licences and business records clearly established his exclusive entitlement to continue the business.

Respondent's Arguments

The respondents argued that:

  • No transfer of licence had taken place.
  • Respondent No. 5 had applied for and obtained a fresh licence after complying with all statutory requirements.
  • The restaurant premises were jointly owned by both brothers.
  • The licensing authority conducted inspections and verified possession before granting the licence.
  • Since the property remained jointly owned and unpartitioned, no exclusive right could be claimed by either party.
  • The licensing authority merely recognised the person who had applied with valid supporting documents.
  • The licence granted in 2019 had already expired and was not renewed because of the continuing ownership dispute.

Court Order / Findings

The Jammu & Kashmir and Ladakh High Court examined the provisions of the Food Safety and Standards Act, 2006, particularly Section 31, along with the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011.

The Court held that:

  • An FSSAI licence is granted to a food business operator in respect of authorised premises.
  • Where ownership and possession of the premises are seriously disputed between joint owners, the licensing authority cannot grant or renew an exclusive licence in favour of one co-owner to the exclusion of the other.
  • Since both parties jointly owned the restaurant premises and the property had not been partitioned, neither party could claim exclusive entitlement before the licensing authority.
  • The licence granted in favour of Respondent No. 5 had already expired and was not renewed because of the dispute, leaving no surviving grievance regarding renewal.
  • The Court also observed that GST registration depends upon lawful conduct of business. Until the dispute regarding entitlement to operate the restaurant is resolved, neither party can claim exclusive GST registration.
  • The appropriate course is either:
    • both parties jointly applying for licence and GST registration, or
    • settlement or partition of the property through mutual agreement or competent civil proceedings.

Accordingly, the writ petition was disposed of with directions that no exclusive FSSAI licence or GST registration should be granted to either party until the ownership dispute is resolved.

Important Clarification

This judgment clarifies that:

  • Joint ownership disputes directly affect eligibility for obtaining or renewing statutory business licences.
  • FSSAI authorities should not issue or renew exclusive licences where competing ownership claims remain unresolved.
  • GST registration cannot operate independently where the legal right to conduct the business itself is uncertain.
  • Co-owners may jointly apply for statutory registrations or first resolve ownership disputes through partition or appropriate legal proceedings.
  • Licensing authorities must consider lawful possession and entitlement before granting exclusive regulatory approvals.

Sections Involved

  • Section 31 – Food Safety and Standards Act, 2006
  • Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011
  • Section 22 – Central Goods and Services Tax Act, 2017
  • Section 2(105) – Central Goods and Services Tax Act, 2017 (Definition of Supplier)

Link to Download the Order

https://mytaxexpert.co.in/uploads/1785319776_2220compressed.pdf

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