Steel India Vs State Tax Officer

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

The petitioner has approached this Court challenging Ext.P4 order cancelling the registration granted to the petitioner under the Central Goods and Services Tax/State Goods and Services Tax Acts, 2017 (CGST/SGST Acts) as also Ext.P7 order of the Appellate Authority confirming the decision of the original authority.

2. The brief facts of the case are that the petitioner was issued with Ext.P2 show cause notice calling upon the petitioner to show cause as to why the registration of the petitioner should not be cancelled for the following reasons:

“1.Rule 21(a) – person does not conduct any business from declared place of business.

2. Rule 21(b) – person issues invoice or bill without supply of goods or services or both in violation of the provisions of the Act, or the rules made thereunder”.

The reply filed by the petitioner to Ext.P2 is on record as Ext.P3. In Ext.P3, the petitioner stated as follows:

I. “Clarification for- Rule 21(a)-person does not conduct any business from declared place of business:

As explained earlier, our business operations have ceased temporarily w.e.f. 01.10.2022 and we are not having any business w.e.f. 01.10.2022. The Place of Business declared in our GST Registration is a rented place and there were some disputes with the landowner relating to rental payments, due to which the rental payments for a few months fell due. We intend to continue our business when the business conditions improve.

II. Clarification for- Rule 21(b)- person issues invoice or bill without supply of goods or services or both in violation of the provisions of the Act, or the rules made thereunder: 

As already explained, our business activity was ceased temporarily w.e.f. 01.10.2022 and we are not having any business w.e.f. 01.10.2022. We have not issued any tax invoices w.e.f. 01.10.2022. Therefore, your allegation that we have issued Invoices without supply is not correct. As can be seen from our GSTR-1 and GSTR-3B that our outward supply is Nil from the tax period October 2022. We have carried on business activities upto 30.09.2022 and have issued Invoices to customers and uploaded the Invoices in GSTR-1, paid taxes and filed GST Returns on time”.

The original authority by Ext.P4 order found that the explanation submitted by the petitioner was not satisfactory and therefore proceeded to cancel the registration of the petitioner. The petitioner preferred W.P(C)No.29033/2023, challenging the order of cancellation. This Court, after examining the contentions of the petitioner in detail, dismissed the writ petition by judgment dated 05-10-2023. The petitioner carried the matter to a Division Bench of this Court. The Division Bench, by judgment dated 26-10-2023 in W.A.No.1859/2023, permitted the petitioner to approach the Appellate Authority by filing a statutory appeal. The Appellate Authority dismissed the appeal by Ext.P7 order after considering each and every contention taken by the petitioner. It is thus that the petitioner is before this Court.

3. The learned counsel appearing for the petitioner submits that the registration of the petitioner was cancelled for two reasons. It is submitted that the first reason was that, according to the officer, the petitioner had stopped business at the place mentioned in the certificate of registration. The second reason was that the petitioner had issued certain fake invoices without actual supply of goods. It is submitted that both these reasons are unsustainable, and the petitioner was actually conducting business at the premises in question till October, 2022. It is submitted that the petitioner had stopped business owing to financial difficulties. It is submitted that there is no material whatsoever to show that the petitioner issued invoices without actual supply of goods.

4. The learned Government Pleader submits that the petitioner has made out no case for restoration of the registration granted to the petitioner. It is submitted that the contentions raised by the petitioner were earlier examined by the learned Single Judge of this Court in the judgment dated 05-10-2023 in W.P(C)No.29033/2023. It is submitted that the original authority had also considered all the contentions taken by the petitioner in detail, and following the judgment of the Division Bench of this Court in W.A.No.1859/2023, the matter had been considered in detail by the Appellate Authority also. It is pertinently pointed out that the petitioner cannot have any grievance regarding cancellation of registration, and if the petitioner wishes to restart the business, it can very well apply for fresh registration after complying with all formalities.

5. Having heard the learned counsel for the petitioner and the learned Government Pleader, I am of the view that the petitioner has not made out any case for interference with the impugned orders. A perusal of Ext.P4 order of the original authority will show that the contentions taken by the petitioner had been considered by the original authority, and there was a specific finding that the petitioner was not conducting business in the premises mentioned in the certificate of registration. It is also seen from Ext.P4 that, according to the statement recorded from the landlord of the petitioner, the premises in question were leased out to the petitioner for conducting iron and steel business from 2012 to May 2017, and thereafter no business had been conducted by the petitioner in the said premises. It is also seen that the premises were thereafter leased out by the landlord to another person, who had no relation whatsoever with the petitioner. The original authority therefore recorded that it is evident that the details provided at the time of migration from the registration under the VAT to GST were false and the registration of the petitioner is therefore liable to be cancelled. Following the directions issued by the Division Bench of this Court in W.A.No.1859/2023, the Appellate Authority also considered the contentions taken in detail and found as follows:

“11. The first issue to be decided in this case is whether the appellant had conducted business from the tenanted premise IX/205, Kandassankadavu for the period from May 2017 to 24-06-2023.

The primary statutory document to establish a business place is the license issued by the Local Panchayath. In the case, the appellant had not obtained panchayath license for the disputed period. Further, in rented buildings, the electricity charges are being paid by the lessee, even though receipt is issued in favour of lessor. The appellant could not produce electricity charges paid by him for the period May 2017 to 24-06-2023. The appellant could not produce any other statutory documents viz. Registration certificate issued by the labour department etc. to prove his existence in Room No. IX/205, Kandassankadavu.

The appellant produced the following evidences to prove his existence at the disputed room No. IX/205, at Kandassankadavu. Each document produced by the appellant is enlisted below and the reason for acceptance/rejection by me is mentioned against each items.

a) Income tax return for the assessment years 2015­16 to 2022-23:-

The income tax return is filed based on the PAN issued to the assessee and it can even file without a building number. So income tax return cannot be accepted as a proof for existence of running business place at Room No:IX/205.

b) Tax invoices and E-way Bills issued by the supplier in the name of the appellant and those issued by the appellant.

The invoices and document produced by the appellant proves that the appellant is engaged in bill trading. The appellant receives the goods as per supply invoices and subsequently supplies the same, without unloading as there is no business place. So tax Invoices and E-way Bills cannot be accepted as proof of evidence as it can be issued without a business place.

c) Bank statement of account-

Bank statement produced by the appellant cannot prove the existance of business place during the disputed period May 2017 to 24-06-2023. The address in the bank statement will be the address given at the time of opening the account. The address will not change unless changed by the account holder. In this case, the appellant himself being the account holder, not changed the address and continued the bank transactions through that account. So the bank account statement is also rejected.

d) Affidavit dated 18-11-2023 of Sri. Dileesh. V.C. and Ashish.P.S:-

In the sworn affidavit, the deponents affirm that a business by M/s. Steel India, engaged in the trading of Iron and Steel was functioning at IX/205, Mampully, Kandassankadavu, Thrissur for quite some time and the business was being managed by Sri. Biju Surendran.

The above deponents affirm that M/s. Steel India, i.e the appellant firm was functioning at IX/205 for quite some time. The affidavit did not state that whether the appellant business is running at IX/205, during the disputed period, May 2017 to 24-06-2023. Mentioning “quite some time” cannot be accepted as there is specific allegation that the appellant business place is not existed at room No. IX/205 during the period May 2017 to 24-06-2023.

e) Form No.17 notice and Form No.1 recovery notice issued by the commercial tax/SGST Department. The appellant produced copies of the said notices issued be the commercial tax/SGST department, which were delivered to him by the postman. Even if business place is not existing, the tapal will be delivered to the addressee, by the postman based on the instructions. In this ease also, the appellant should have received the official communication based on the Instructions given by him to the postman. So these documents also did not prove the existence of the business place at room No.IX/205.

To conclude, none of the documents produced by the appellant could not establish the existance of business place of the appellant at room No: IX/205, at Kandassankadavu. The appellant did not held or obtained any statutory documents like panchayath license, which is a mandatory one to run the business. In addition to above, the Senior Enforcement Officer, Enforcement Squad, SGST Department, Thrissur and the respondent himself, on enquiry have found that the appellant has no business place at room No. IX/205, since May 2017. So, I find the appellant have obtained registration by means of fraud, wilful misstatement or suppression of facts, enabling the respondent to initiate action under Section 29(2)(e) of the Act. Hence, the impugned order issued by the respondent is found to be in order.

12. In these circumstances, the following order is issued:

ORDER

13. The appeal No.AD3210230045212 (GSTA-629T/23) filed by M/s.Steel India, IX/205, Mampully, Kandassankadavu, Thrissur, Kerala, 680613 (GSTIN 32ACGFS5443R1ZL) is rejected and the order No.ZA320623032284Y dated 24-06-2023 (32ACGFS5443R1ZL/2023-24 dated 24-06-2023) issued by the State Tax Officer, Taxpayer Services Circle, Nattika is upheld. RESULT:GSTA-629T/23 (2023-24); DISMISSED”.

There is nothing on record to indicate that any of the findings recorded by the Appellate Authority are wrong and require interference at the hands of this Court under Article 226 of the Constitution of India. That apart, as rightly pointed out by the learned Government Pleader, if the petitioner intends to restart the business, it will always be open to the petitioner to apply for fresh registration after complying with formalities.

In the light of the above, I find no reason to entertain this writ petition. Writ petition fails, and it is accordingly dismissed.