Top Stories GST Registration Suspension without Invoking Civil or Criminal Action for Contravention of Provisions Directly hits Fundamental Right: Madras HC [Read Order] Even if the petitioner allegedly obtained registration fraudulently or violated the Act by not operating from the declared place, the respondent can initiate legal action through civil and criminal provisions By Navasree A.M – On November 6, 2024 8:39 pm – 3 mins read

The direct suspension of Goods and Services Tax ( GST ) registration without invoking civil or criminal action for contravening the GST provisions directly hits the fundamental right of the petitioner to carry out trade and business. Justice Krishnan Ramasamy ruled that “As already observed, if at all the petitioner indulged in conducting the business in contravention of the provisions of the Act, the respondent is supposed to take both civil as well as the criminal action against the petitioner in the manner provided in law, but certainly, ought not to have suspended the GST registration of the petitioner. It directly hit the fundamental right of the petitioner since the petitioner is entitled to trade and carry on the business.” Complete Draft Replies of GST ITC Related Notices, Click Here

The court also noted that “Even, if the petitioner company indulged in allegedly obtaining Section 29(2)(e) registration by means of fraud or not conducting the business from declared place in violation of provisions of the Act, the respondent can very well initiate legal action by invoking civil and penal provisions by way of civil and criminal cases.” Tvl.A.V.Traders, the petitioner filed  writ petition before the high court challenging the  impugned suspension of registration and the show cause notice issued for the purpose of cancellation of GST number. Mr.D.Vijayakumar, the counsel for the petitioner argued that a notice in Form GST REG-17 was issued to the petitioner on 05.09.2024, to which a reply was filed on 12.09.2024. However, the respondent has yet to decide on revoking the GST registration suspension, despite the petitioner’s compliance. Complete Draft Replies of GST ITC Related Notices, Click Here

The petitioner, a legitimate business, has been regularly filing monthly GST returns and paying taxes as required by law. The suspension has halted their business operations and ability to file returns. Mr. Vijayakumar stated that the suspension infringes upon the petitioner’s fundamental right to conduct business, a violation of constitutional rights. The counsel further argued that, if the respondent intended to take legal action for alleged misuse of the GST registration, it should have followed the appropriate procedures outlined in the Act. Instead, the respondent arbitrarily suspended the petitioner’s GST registration on 05.09.2024, violating constitutional rights, and issued a show cause notice on the same date. Despite the petitioner filing a reply on 12.09.2024, no decision has been made, prompting the petitioner to file this Writ Petition.

The counsel Mr. T.N. Kaushik ( Additional Government Pleader ), informed the court that the petitioner’s reply will be considered, and appropriate orders will be passed within the time frame set by the Court. The bench noted that it is undisputed that the petitioner has the right to conduct business, and the respondent is obligated to grant GST registration in accordance with the law. Even if the petitioner allegedly obtained registration fraudulently or violated the Act by not operating from the declared place, the respondent can initiate legal action through civil and criminal provisions. Complete Draft Replies of GST ITC Related Notices, Click Here However, instead of following due process, the respondent arbitrarily cancelled the petitioner’s GST registration, infringing upon the petitioner’s fundamental right to trade.

The suspension, without invoking penal provisions, amounts to an unconstitutional denial of the petitioner’s right to do business, stated the bench. The high court ruled that if the petitioner violated the GST Act, the department should have pursued civil and criminal actions, not suspended the GST registration. The suspension directly violates the petitioner’s fundamental right to trade and carry on business, making the impugned order unsustainable. It also noted that the reply of the petitioner was not considered by the department. Consequently, the proceedings cancelling the GST registration were set aside. The department was directed to  consider the reply and pass appropriate orders on merits and in accordance with law to revoke the suspension of GST registration.  To Read the full text of the Order CLICK HERE