Constitutional guarantee is unconditional and must be enforced regardless of shortcomings in scheme of GST enactment

Hearing a petition pertaining to the issue of cancellation of GST registration and rejection of application seeking revocation of cancellation of registration, the High Court of Bombay bench at Aurangabad observed that the Petitioner, an entrepreneur, having suffered a combination of situational difficulties caused by the COVID pandemic, as well as personal health problems, could not be prejudiced through denial of GST registration, which led to an adverse impact on the Petitioner’s right to earn a livelihood.

The Bench also observed it to not be in the interests of the Government to curtail the rights of entrepreneurs to carry on trade and professions, a right protected by Articles 19(1)(g) and 21 of the Constitution. (Paras 13-14)

A Division Bench of Justice Mangesh S Patil and Justice S G Chapalgaonkar justified the Writ Court’s intervention in the present matter and relied on the Supreme Court’s judgment in the case of Mafatlal Industries Ltd. Vs Union of India and observed that – “…the jurisdiction of the High Court under Art. 226 of the Constitution of India or Supreme Court under Article 32 cannot be restricted by the provision of any Act to bar or curtail remedies. True that while exercising the constitutional power, the Court would certainly take note of legislative intent manifested in the provisions of the Act and would exercise jurisdiction consistent with the provisions of enactment. The constitutional Courts in exercise of such powers cannot ignore law nor can it override it…”.  (Para 12)

The Petitioner-company was represented by Advocate Alok Sharma, whereas the Respondent-Revenue was represented by Advocate A.S. Shinde.

The Petitioner, a Small-Scale Industry entrepreneur, claimed to have been unable to file GST returns for the relevant period, on account of financial losses incurred during the COVID pandemic and also because the proprietor of the Petitioner-company had serious health issues and was seeking treatment for the same.

Meanwhile, the Petitioner was served notice proposing to cancel the GST registration held by it. The Petitioner filed reply with application seeking revocation of cancellation of GST registration. But, the application of the Petitioner was rejected by the State Tax Officer.

The Petitioner filed appeal as per the statute, however, the appeal was dismissed on grounds of limitation.

On hearing the contentions of both the parties, the Bench observed that the provisions of GST enactment could not be so interpreted, as to deny right to carry on Trade and Commerce to any citizen and subjects.

The constitutional guarantee is unconditional and unequivocal and must be enforced regardless of shortcomings in the scheme of GST enactment, the Bench added. (Para 9)

The Bench further cautioned that if assessees such as the Petitioner herein were disallowed from reviving GST registrations, the State would suffer loss of revenue and the ultimate goal under GST regime will stand defeated. The Petitioner deserved a chance to come back into GST fold and carry on his business in legitimate manner, the Bench observed.

Commenting on the dismissal of the Petitioner’s appeal filed under the Maharashtra GST Act, the Bench noted that while the Deputy Commissioner of State Tax was not empowered to condone delay beyond 30 days, nevertheless, the objective behind limitation provisions in the statute had to be kept in mind, namely that their objective was to terminate the lis and not to divest a person of the right vested in him by efflux of time. (Para 11)

With these observations, the order cancelling the registration held by the Petitioner and the order of the Appellate Commissioner rejecting the Petitioner’s appeal, were both quashed. The Bench proceeded to hold the Petitioner’s GST registration as being valid, conditional upon the Petitioner filing up-to-date GST returns and clearing any tax and interest dues.

Cause Title: Rohit Enterprises Vs The Commissioner, State GST Bhawan Aurangabad & Ors. [Writ Petition No. 11833 of 2022 / 2023-Enterslice-8-HC-Bom-GST]

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