Order Date – 07 January 2023

Parties: SKP Pharmachem Vs Union of India

Facts –

• The Petitioner, SKP Pharmachem, in March 2022, exported goods being wholly unaware that it was operating under the composition permission which was chosen by his tax practitioner and it was not entitled to export goods under such permission. The composition  permission was effected  from 26.12.2021.
• In March, 2022, the petitioner got an export order pursuant to which the petitioner exported the goods being wholly unaware that it was operating under the composition permission and it was not entitled to export goods under such permission. Respondents also accepted the  Letter of Undertaking for allowing without payment of tax.
• On aware of the error committed the petitioner filed an application for withdrawal from composition levy on 1.3.2022. The grievance on the part of the petitioner is composition permission was withdrawn with effect from 8.4.2022 i.e. the date on not allow him to retrospectively withdraw from the composition permission and hence, the petitioner raised a grievance with the GST helpdesk on 12.5.2022.
• A Notice was issued on 27.6.2022 as a return defaulter and calling upon the petitioner to file the pending returns. Another letter was issued on 29.6.2022 to the petitioner communicating that he would not be in a position to retrospectively cancel the composition permission in absence of functionality on the GST portal.

Issue – 

• Whether the request for cancellation of composition permission with effect from 1.3.2022 could have been denied?

Order –

• The Divisional bench of the Hon’ble High Court observed that the petitioner is right that the  moment he entered into the export transactions would become entitled for composition permission  because of provision of Section 10 and his permission is required to be cancelled  with effect from the date of export transaction. The limitation of the software should not become the limitation of the implementation of the statue which otherwise is quite clear on this aspect.
• Even without entering into the intent of the party concerned, his request for cancellation of his composition permission granted under Section 10 of the CGST Act with effect from 16th March, 2022 shall need to redress.
• The petitioner is within his right to seek direction to cancell his composition permission with effect from his having made the expert on 16th March, 2022. While acceding to his  request of such  permission to be treated  to have been cancelled from  16th March, 2022. We also direct the respondent-authority to take care of the software.
• Writ Petition disposed of.