GST registration can’t be cancelled if business not carried out from premises due to Covid 19 norms, protocols: Calcutta HC

The order was issued in case of an appeal filed by International Value Retail against revenue department and GST authorities, where the latter had issued a show cause notice and adjudication order cancelling the company’s registration for not carrying out its businesses from official premises but from home, in November 2020.

“…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. ET has seen a copy of the order.

The Court also directed revenue authorities to consider afresh the company’s application for revocation of cancellation of its registration under GST Act in accordance with law.

The Court further directed the authorities to pass a ‘reasoned and speaking order’ after hearing the petitioner or an authorized representative, within four weeks and to consider the documents to be placed by them at the time of hearing.

During the first wave of the Covid 19 pandemic, the country went into a nationwide lockdown from March-end till June, and phased opening was adopted over the following months. During the time, many businesses opted for ‘work from home’ policy for their employees, even as business activity from registered premises came to a grinding halt, albeit temporarily.

Experts said that the judgement would come as a relief to companies that may be facing similar situations, as such cancellations were not justified given the circumstances that businesses faced during the pandemic.

“Departmental officers are duty-bound to examine the ground realities before bringing the businesses to a halt, else it will be a regressive step for the Indian entrepreneurs,” said Rajat Mohan, senior partner at AMRG Associates.

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, said Sandeep Sehgal, director- tax and regulatory at tax consulting firm AKM Global.

“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 added.