GST Act Can’t Be Interpreted To Deny Right To Carry Trade And Commerce By Citizens: Bombay High Court

The Aurangabad Bench of the Bombay High Court has held that the provisions of the GST enactment cannot be interpreted so as to deny the right to carry on trade and commerce to any citizen or subject.

"The constitutional guarantee is unconditional and unequivocal and must be enforced regardless of shortcomings in the scheme of GST enactment. 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 the petitioner is not allowed to revive the registration, the state would suffer a loss of revenue, and the ultimate goal under the GST regime will stand defeated," the division bench of Justice Mangesh M. Patel and Justice S.G. Chapalgaonkar observed.

The petitioner/assessee is employed in the fabrication industry. It is registered under the Central Goods and Services Tax Act, 2017 as well as the Maharashtra State Goods and Services Tax Act, 2017. The certificate of registration was issued to his firm.

The petitioner contended that since he had undergone angioplasty and the firm suffered a financial setback in the pandemic situation, GST returns from August 2021 could not be filed.

Section 29(2) of the GST Act enables proper officers to cancel registration if a registered person or firm fails to furnish three consecutive returns.

The State Tax Officer, Aurangabad, issued a show-cause notice, calling upon the petitioner to furnish his explanation within a period of seven working days. The notice stipulated that the registration of the petitioner stood suspended. The petitioner replied to the show cause notice on March 3, 2022. Citing the reason for the financial crunch, he requested the revocation of the notice. However, the State Tax Officer canceled the registration with effect from August 21, 2021.

The petitioner requested the revocation of the cancellation of registration. In response, the state tax officer issued a show cause notice for the rejection of the application. The petitioner was called upon to furnish the reply within 7 days along with supporting documents like bank statements up to the date of the notice, a challan of tax, interest, and a late filing penalty. The case was scheduled for a hearing on April 25, 2022. Finally, the state tax officer rejected the application of the petitioner seeking revocation of cancellation.

The petitioner stated that he works as a vendor for Bajaj Auto Limited and earns his living through fabrication. Due to the pandemic situation, the business activities of the petitioner were hampered, causing huge financial losses. The petitioner was also unwell.

The department contended that the petitioner was given a reasonable opportunity before the cancellation of the registration. On February 28, 2022, he received a show cause notice, as well as an order suspending his registration. The petitioner was given the opportunity to furnish the documents while dealing with his application for revocation or cancellation of registration. Because the petitioner did not take advantage of the opportunity, his application for revocation or cancellation of registration was denied.

The court, while allowing the appeal, held that even looking at the object of the provisions under the GST Act, it is not in the interest of the government to curtail the rights of entrepreneurs like the petitioner. The petitioner must be allowed to continue business and contribute to the state’s revenue. The petitioner has submitted before us that the petitioner is ready and willing to pay all the dues, along with penalty and interest as applicable.

Case Title: Rohit Enterprises Versus The Commissioner State GST Bhavan

Case No. - Writ Petition No. 11833 Of 2022

Citation: 2023 LiveLaw (Bom) 108

Date: 16-02-2023

Counsel For Petitioner: Alok Sharma

Counsel For Respondent: A.S. Shinde

Click Here To Read The Order