GST Registration, FSSA License Cannot Be Granted If The Premise Is Under Dispute: J&K&L High Court

The High Court of Jammu & Kashmir and Ladakh has held that the GST Registration cannot be granted if the ownership of the business owner's premise is under dispute.

The single bench of Justice Sanjeev Kumar observed that until the dispute is settled between the parties amicably or through intervention of the Court of competent jurisdiction, neither the designated authority under the Food Safety and Standard Act, 2006 shall issue the licence nor registration shall be accorded under the GST Act to either of the parties in respect of the premises "Samci Restaurant."

"So long as the premises to be licensed under the Act remains under dispute between the petitioner and respondent No.5 [petitioner's brother], the designated authority under the Act is well within its power not to grant or renew the license under the Act in favour of one and to the exclusion of other," said the court.

In the year 1993, the petitioner and respondent jointly purchased a two-story tin-roof building in Srinagar. The petitioner stated that the entire consideration amount was paid by him and that his brother's name was also included in the sale deed as a vendee, though he had not paid even a single penny towards the purchase of the subject property.

The petitioner claimed that the subject property was rebuilt into a six-story building. The petitioner on the ground floor started running a restaurant under the name and style of Samci Restaurant, and the rest of the floors were rented out by the petitioner to different tenants.

The petitioner submitted that, despite the fact that the petitioner had been running the Samci Restaurant, the respondent, in connivance with the officials of the Food Safety Department, succeeded in getting the petitioner's licence transferred to his own name.

The petitioner requested the department to withdraw and cancel his order for transfer and grant of licence in favour of the respondent. The Samci Restaurant, run by the petitioner, had a valid registration under the Value Added Tax Act. However, after coming into force the CGST Act, the petitioner's concern was also registered under the CGST Act and a registration certificate in this regard was issued in his favour on December 8th, 2017.

The petitioner contended that his brother, by abusing his trust and by sheer deception and misrepresentation, also succeeded in getting the GST registration issued in favour of the petitioner cancelled by the authorities.

The petitioner stated that on coming to know of the cancellation of his registration under the GST Act, he immediately applied to the authorities, making it clear to them that he had not applied for any cancellation of his registration under the GST Act. An application was also submitted to Deputy Commissioner (Appeals), Sales Tax Department, raising allegations that some of the employees of the department were in connivance with the respondent. The employees had mischievously submitted an online application for cancellation of registration under the GST Act, which was issued in favour of the petitioner, the petitioner alleged.

While, the petitioner's brother in response said Samci Restaurant is property jointly owned by them, the authorities told the court that the FSSA license has not been renewed after its expiry in view of the dispute between the two brothers. 

The court said if the dispute between the two continues, it would be appropriate for both the authorities to refuse the grant of licence and registration to them. The petitioner as well as the respondent are well advised to settle their dispute either amicably or through the intervention of the court, said the bench.

"In the absence of a licence under the Act, it would not be competent either for the petitioner or for respondent to carry on the food business in the premises known as "Samci Restaurant". The authorities shall take note and act accordingly," the court said.

Case Title: Parveez Ahmad Baba Versus Union Territory of J&K and others

Citation: 2022 LiveLaw (JKL) 152

Case No.: WP(C) No.1997/2021

Date: 13.09.2022

Counsel For Petitioner: Advocates M.A.Qayoom, M. Tufail

Counsel For Respondent: Sr. Advocate Jahangir Iqbal Ganie, Advocate Muzaffar Nabi Lone

Click Here To Read The Judgement