High Court Says GST Act too Complicated for Common Man in Cancellation Case

The petitioner, the assessee company, attempted to contest the cancellation of its GST registration by submitting a writ petition to the High Court, challenging both the cancellation order and the appellate order that upheld the cancellation. The petitioner acknowledged during the hearing that no such application for revocation had been filed to date, despite the fact that Section 30 of the CGST Act, 2017 offers an alternative remedy for requesting revocation of cancellation.

The respondents argued that because the petitioner had a sufficient statutory remedy under the Act, the writ petition was premature. However, the petitioner claimed that the cancellation order had significantly hampered its capacity to carry on with business as usual and asked for a pardon for the delay in applying Section 30. The Court took note of the surrounding circumstances, particularly the early stage of GST implementation and the confusion faced by small businesses regarding procedural compliance.

Central Issue: Whether the High Court, exercising its writ jurisdiction, can excuse a delay in filing an application for the registration revocation or cancellation under Section 30 of the CGST Act.

HC’s Ruling: The High Court determined that the delay in filing a revocation application under Section 30 of the CGST Act should be excused due to the relatively new nature of the GST regime and its procedural complexity, particularly for small business operators. The Court noted that a person’s right to subsistence under Article 19 of the Constitution is directly impacted by registration cancellation, which also costs the State money.

“In view of the enforcement of the Act being at the initial stage and various typical aspects of the Act being a little beyond the understanding of a common man, whose prime focus is on running his day to day business, we feel that the limitation should not take precedence for reconsideration of the order of cancellation. The cancellation directly affects the livelihood of the citizen and every cancellation would also have an adverse effect on the revenues of the State, as it is well known that no person can carry-on trade or business as guaranteed under Article 19 of the Constitution of India, without complying with the restriction of registration.“

Therefore, the appellate order was overturned. According to the Court’s directions, the competent authority must review and decide on the petitioner’s request for revocation within three weeks of the order’s date and submit all returns up until that date in compliance with the law. With these instructions, the writ petition was dismissed, and all applications pending were set aside.

To Read Complete Judgment, Download PDF Given Below