GST Registration Cancelled for Missing Bank Details—High Court Gives Second Chance

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Case Name:

Shri Ganesh Majoor Sahakari Sanstha Ltd. Through its Chairman, Suresh Piraji Shirale vs. The Union of India & Others (High Court of Judicature at Bombay, Bench at Aurangabad)

Writ Petition No. 9832 of 2024

Date: 27th November 2024

Key Takeaways

• GST registration can be cancelled for not providing bank details under Rule 21(d) read with Rule 10A of the Central Goods and Service Tax Act, 2017.
• Appellate authorities have no power to condone delays beyond the period specified in Section 107 of the GST Act.
• High Courts can intervene under Article 226 of the Constitution if strict application of the law would violate fundamental rights, such as the right to carry on business under Article 19(1)(g).
• The Court set aside the cancellation and allowed the petitioner to respond afresh, highlighting a pragmatic approach in genuine cases of delay.

Issue

Can the High Court intervene and allow a delayed appeal against GST registration cancellation when the appellate authority has no power to condone such delay, especially if the delay was due to genuine circumstances?

Facts

• Petitioner: Shri Ganesh Majoor Sahakari Sanstha Ltd., a labour supply business registered under GST.
• Incident: The GST registration was cancelled on 13.06.2023 by the authorities because the company failed to provide its bank details, as required by Rule 21(d) and Rule 10A of the CGST Act, 2017.
• Show Cause Notice: Issued on 31.05.2023, but the company didn’t respond because the chairman had died and the successor was unaware of the notice.
• Delay in Appeal: The new chairman learned about the cancellation only after the order was passed, leading to a delayed appeal on 07.08.2024.
• Appellate Authority: Could not condone the delay due to lack of statutory power under Section 107 of the GST Act.
• Petition: The company approached the High Court for relief.

Arguments

Petitioner’s Arguments

• The delay in responding to the show cause notice and filing the appeal was due to the chairman’s death and the successor’s lack of knowledge.
• There is a statutory void—the appellate authority cannot condone delays beyond the period specified in Section 107, even for genuine reasons.
• Strict application of the law would violate the fundamental right to carry on business under Article 19(1)(g) of the Constitution.

Respondents’ Arguments

• The appellate authority has no statutory power to condone the delay beyond the stipulated period.
• Cited previous decisions where the courts upheld this lack of power:
• Sanjeev Suresh Desai Vs. Union of India and Ors. (Writ Petition No. 2876/2021 and 2891/2021)
• M/s. B.T. Ghuge Civil Engineer and Contractor Vs. The Union of India and others (Writ Petition No. 6201/2024)
• Rohit Enterprises Vs. The Commissioner, State GST and others (Writ Petition No. 11833/2022)
• The cancellation was legal since the petitioner admitted to not furnishing the bank details.

Key Legal Precedents

• Section 107 of the GST Act: Limits the appellate authority’s power to condone delays in filing appeals.
• Rule 21(d) read with Rule 10A of the CGST Act, 2017: Requires furnishing of bank details for GST registration.
• Article 19(1)(g) of the Constitution: Guarantees the right to carry on any occupation, trade, or business.
• Article 226 of the Constitution: Empowers High Courts to issue writs for enforcement of fundamental rights.
• Mafatlal Industries Ltd. Vs. Union of India; (1997) 5 SCC 536: High Court’s jurisdiction under Article 226 cannot be restricted by statutory provisions.
• Rohit Enterprises (Writ Petition No. 11833/2022): Cancellation of GST registration can adversely affect both the business and the State’s revenue; courts should take a pragmatic approach.

Judgement

• The High Court allowed the writ petition.
• The cancellation order dated 13.06.2023 was quashed and set aside.
• The petitioner’s appeal before the appellate authority was disposed of.
• The petitioner was directed to appear before the GST authority on 02.01.2025, respond to the show cause notice, and provide the required bank details.
• The GST authority was instructed to make a fresh decision in accordance with the law.
• The Court clarified that it had not expressed any opinion on the merits of the case.

FAQs

Q1: Why was the GST registration cancelled?

A: Because the company failed to provide its bank details as required by Rule 21(d) read with Rule 10A of the CGST Act, 2017.

Q2: Why couldn’t the appellate authority condone the delay?

A: Section 107 of the GST Act does not give the appellate authority power to condone delays beyond the specified period.

Q3: What did the High Court decide?

A: The High Court set aside the cancellation, allowed the company to respond afresh, and directed the GST authority to reconsider the case.

Q4: What legal principles did the Court rely on?

A: The Court relied on the right to carry on business under Article 19(1)(g) and its own powers under Article 226 to ensure justice in genuine cases of delay.

Q5: Does this mean anyone can get their GST registration restored after a delay?

A: Not automatically. The Court intervened here due to genuine circumstances (death of the chairman and lack of knowledge). Each case will depend on its facts.