Cancelling GST registration aggravates unemployment: Calcutta High Court

Cancelling GST registration aggravates unemployment: Calcutta High Court

Advises authorities to provide opportunities of hearing to the concerned persons

The Calcutta High Court has observed that cancellation of Goods and Services Tax (GST) registration of businesses on hyper-technical grounds causes revenue loss for the state and aggravates unemployment.

It directed that a 'reasoned order' must be passed while cancelling the registration and that opportunity of hearing must be given to the concerned parties.

Justice MD Nizamuddin observed, "It is not a case of tax evasion or causing revenue loss to the government. In fact, the petitioner's activity of carrying on the business, which cannot be called illegal, is creating revenue for the state and is helping the state to solve the problem of unemployment."

The Court was adjudicating upon a plea moved by M/s. CIGFIL Retail, whose registration had been cancelled by the authorities under the provisions of the state's GST Act.

The cancellation was done on the ground that registration had been obtained by documents, which were void from the beginning and no business was being carried out from the declared premises.

However, the petitioner argued that the registration had been cancelled on a purely technical ground of minor defect in the sub-let agreement, which was entered into between the petitioner and the lessor. The court was informed that the error was subsequently rectified by a supplementary agreement, which was submitted before the authorities.

Furthermore, the petitioner contended that in order to avoid the violation of Covid-19 protocols, it was carrying on the business activities from elsewhere and not from the declared premises. And even during the period, it had paid tax to the state and the concerned GST authority.

Setting aside the cancellation order, the court directed the state authority to consider the case afresh. It reiterated that the state must not take a hyper-technical view and pass a well-reasoned order.