There is no law which mandates a businessman to always retain stock at the place of business for valid GST registration.

Cancellation of registration has serious consequences, it takes away the fundamental right of a citizen etc. to engage in a lawful business activity.

Cancellation of registration can take place where only condition provided under Section 29 sub clause 2 of the Act of 2017 are fulfilled stated as follows:

"(2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,-

 (a) a registered person has contravened such provisions of the Act or the rules made there under as may be prescribed; or

 (b) a person paying tax under section 10 has not furnished returns for three consecutive tax periods; or

(c) any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or 

(d) any person who has taken voluntary registration under subsection (3) of section 25 has not commenced business within six months from the date of registration; or 

(e) registration has been obtained by means of fraud, willful misstatement or suppression of facts: Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard. 

[PROVIDED FURTHER, that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed.]" 

M/S Shree Ram Glass Bachauli Kuftabad Beekapur Thru. Partner Shree Aman Jaiswal challenged the order of cancellation of registration under U.P. Goods and Services Tax Act, 2017 vide order dated 1.6.2023 as well as rejection of the application for revocation vide order dated 2.9.2023 and also rejection of his appeal against both the aforesaid orders by means of order dated 30.11.2023 before Hon'ble Allahabad High court vide Writ - C No. - 1346 of 2024

It has been submitted that Petitioner is a partnership firm engaged in the business of trade of glass and glass sheets. The firm was transacting business and filing its returns. GST returns pertaining to financial years 2021-22 and 2022-23 have been filed and tax on the same has been paid by the petitioner. Registration of the petitioner was cancelled on the basis that petitioner does not conduct any business at the declared place of business and does not respond to any show cause notice issued to him. On further inspection of the premises it was found that there was no stock maintained at the place of business and the signatures of the landlord did not tally with the rent agreement submitted during the inspection.

Held

Considering the provisions under Section 29(2) along with facts of the case, there is no denial of the fact that petitioner has conducted business as the returns filed for the financial years 2021-22 and 2022-23 have been filed and this fact has not been denied by any authority.

Since the registration has been granted by the respondent authority, it is presumed that it has been granted after due verification of necessary facts. If the respondents propose to cancel the registration, a heavy burden lay on the respondent to see that the conditions under Section 29(2) for the purpose of cancellation are fulfilled.

Conclusion

Merely because at the place of business no stock was found it was concluded that the petitioner did not conduct any business activity. There is no law which mandates a businessman to always retain stock at the place of business. To come to such a conclusion the authorities should have undertaken further exercise to indicate that the returns filed by the assessee themselves were fraudulently filed only to claim Input Tax Credit. The authorities have failed to discharge the duties and merely because the place of business did not contain any stock the registration of the petitioner was cancelled.

It is in aforesaid circumstances that Hon'ble Court is of the considered opinion that both the impugned orders are illegal and arbitrary and accordingly set aside. 

Disclaimer : The entire content of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation .Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.

IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT,INDIRECT,SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM,ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.

Finance Ministry likely to postpone implementation of 45-day payment rule for MSMEs to April 2025.

The Finance Ministry is contemplating a deferment of the enforcement of Rule 43B (h) under the Income Tax Act, which mandates payments to micro, small, and medium enterprises (MSMEs) within 45 days, sources informed CNBC-TV18.
The proposed postponement is expected to span a full financial year, with the rule anticipated to take effect from April 1, 2025, sources said.

The Finance Act of 2023, which amended the Income Tax Act, introduced clause (h) in Section 43B to ensure timely payments to MSMEs.
This amendment set as 45 day limit or the assessee to fulfill payments.

Failure to adhere to this timeline would result in pending payments being treated as income and subject to taxation.

The decision to reconsider the implementation timeline comes in the wake of numerous industry representations submitted to the finance ministry.
various sectors expressed apprehensions about the shorter payment cycle, asserting that it challenges traditional practices and has already led to order cancellations.

Industry bodies, in their proposals to the finance ministry have suggested potential tweaks to the act or a temporary postponement to provide businesses with the necessary adjustment period.

Source: cnbctv18.com

Whether Man Power Services supplied to Zila Panchayat and Taluka Panchayat qualify for Pure services exemption from GST?

Various queries and doubts have been observed in the area of pure services provided to the Central Government, State Government and Local Authority and the applicability of exemption notification in thereto.

“Pure Services (excluding works contract service or other composite supplies involving any goods) provided to the Central Government, State Government or Union territory or local authority or a  Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under  Article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution.”

From the above said entry no.3 of the notification no. 12/2017- Central tax (Rate) dated 26.06.2017  it is observed that, in order to claim exemption on supply of man power services two conditions should be satisfied: 

1. Pure Services (excluding works contract service or other composite supplies involving any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority. 

2. by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution.”

As per section 2(69) of CGST Act 2017 “Local Authority” means: 

(a) Panchayat as defined in clause (d) of article 243 of the Constitution;

(b) a Municipality as defined in clause (e) of article 243P of the Constitution;

(c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund.

(d) a Cantonment board as defined in section 3 of the Cantonment Act,2006

(e) a Regional council or a District council constituted under Sixth Schedule to the constitution.

(f) a Development board constituted under Article 371 of the Constitution or

(g) a Regional council constituted under Article 371A of the Constitution.

243G- Powers, authority and responsibilities of Panchayats subject to the provisions of this Constitution the Legislature of a State may, by law, endow the Panchayats with such powers and authority and may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon panchayats at the appropriate level subject to such conditions as may be specified therein with respect to : 

(a) The preparation of plans for economic development and social justice;

(b) The implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule. 

Matters listed in Eleventh schedule are:

1. Agriculture including agricultural extension. 

2. Land improvement, implementation of land reforms, land consolidation and soil conservation.

3. Minor irrigation, water management and watershed development.

4. Animal husbandry, dairying and poultry.

5. Fisheries.

6. Social forestry and farm forestry.

7. Minor forest produce.

8. Small scale industries including food processing industries.

9. Khadi village and cottage industries.

10. Rural housing.

11. Drinking water.

12, Fuel and fodder.

13. Roads, culverts, bridges, ferries, waterways and other means of communication.

14. Rural electrification, including distribution of electricity.

15. Non-conventional energy sources.

16. Poverty alleviation programme.

17. Education including primary and secondary schools.

18. Technical training and vocational education.

19. Adult and non-formal education.

20. Libraries.

21. Cultural activities.

22. Markets and fairs.

23. Health and sanitation, including hospitals, primary health centres and dispensaries.

24. Family welfare.

25. Women and child development.

26. Social welfare including welfare of the handicapped and mentally retarded.

27. Welfare of the weaker sections and in particular of the Scheduled Castes and the Scheduled Tribes.

28. Public distribution system.

243W.  Powers, authority and responsibilities of Municipalities etc ; subject to the provisions of this Constitution, the Legislature of a State may, by law, endow 

(a) the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law, may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein,

with respect to

(i) the preparation of plans for economic development and social justice;

(i) the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule;

There are 18 items in the twelfth schedule of the Constitution which are as below:

. Urban planning including town planning.

. Regulation of land-use and construction of buildings.

. Planning for economic and social development.

. Roads and bridges.

. Water supply for domestic, industrial and commercial purposes.

. Public health, sanitation conservancy and solid waste management.

. Fire services.

. Urban forestry, protection of the environment and promotion of ecological aspects.

9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded.

10. Slum improvement and upgradation.

11. Urban poverty alleviation.

12. Provision of urban amenities and facilities such as parks, gardens, playgrounds.

13. Promotion of cultural, educational and aesthetic aspects.

14. Burials and burial grounds; cremations, cremation grounds and electric crematoriums.

15. Cattle pounds; prevention of cruelty to animals.

16. Vital statistics including registration of births and deaths.

17. Public amenities including street lighting, parking lots, bus stops and public conveniences.

18. Regulation of slaughter houses and tanneries.

Conclusion

Supply of manpower services like cleaning staff, cook, assistant cook, staff nurse, teachers and watchman to hostels and residential schools/ colleges run by Social welfare department is exempted since the manpower services provided are by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution.

Supply of Manpower services like Data Entry Operator, Drivers, “D” Group staff, FDA, SDA, Typists to Zila Panchayat/ Taluk Panchayat/ Social welfare department/ Backward Classes Welfare Department are not by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution and hence attracts GST at the rate of 18%.

Disclaimer : The entire content of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation .Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.

IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT,INDIRECT,SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM,ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.