The GST Authority’s order to cancel the registration of a company not operating from the registered premises due to the pandemic, has been ruled out by the Calcutta High Court.
The revenue department and GST authorities had issued a show cause notice and adjudication order cancelling International Value Retail’s registration for not carrying out its businesses from official premises but from home, in November 2020. The company filed an appeal in reiteration of the same, leading up to this order passed by the High Court.
Asking the tax authorities to allow the petitioner, International Value Retail Pvt Ltd, to detail their inconvenience, the Court directed the company to place all relevant documents and evidence in support of its submissions and gave the authorities 4 weeks of time to pass a reasoned order after going through the information submitted.
The company said ‘its application was rejected by ignoring the relevant materials which established that at the time of inspection, the assessee was following a work-from-home (WFH) model due to the nationwide pandemic and therefore was temporarily unavailable at its registered place of business.’
Rajat Mohan, senior partner AMRG & Associates, said “in the digital age, businesses must be permitted to function on WFH basis and cancellation of GST registration on such grounds will stall the growth of the Indian industry.”
“The Board (The Central Board of Indirect taxes and Customs) must come out with an austere circular, mandating the tax officers not to cancel the registration of any taxpayer during the pandemic period otherwise than on charges of tax evasion,” he added.
Sandeep Sehgal, Director, tax and regulatory at tax consulting firm AKM Global, said, “The order will also come to the aid of taxpayers who have not been able to file returns or claim input tax credit, because of cancellation of registration due to business not being carried out from the registered premises.”
“This is a welcome judgement that the registration can’t be cancelled when employees are not present at the registered place of business due to the pandemic-like situation,” he stated.
“…only due to extraordinary compelling circumstances of Covid-19 and in following the protocol and norms of Covid-19 temporarily petitioner was not carrying his business from the premises in question from officially registered premises and they were carrying business in question from home,” Justice Md. Nizamuddin said in the order passed last month, which was released on Monday.
“Considering this fact of the case I am inclined to set aside the impugned order dated 9th November, 2020 by which the respondent concerned has rejected the petitioner’s application for revocation of cancellation of its GST registration,” the order stated.