The Calcutta High Court has delivered a significant judgment emphasizing that procedural non-compliance under the Goods and Services Tax (GST) regime should not automatically result in irreversible consequences, particularly when it threatens the livelihood of farmers and disrupts legitimate business activities.
In the case of Kanksa Farmer Producer Company Ltd. vs. Senior Joint Commissioner of Revenue & Appellate Authority (WPA 6893 of 2026), the Court directed the restoration of the GST registration of a Farmer Producer Company (FPC), subject to payment of all applicable taxes, interest, and penalties. The ruling underscores the importance of balancing strict statutory compliance with principles of equity and justice.
Background of the Dispute
The petitioner, Kanksa Farmer Producer Company Ltd., approached the Calcutta High Court after its GST registration was suspended and subsequently cancelled due to the continuous non-filing of monthly GST returns.
The company sought judicial intervention, requesting restoration of its GST registration so that it could continue carrying on its business and fulfil its statutory obligations.
According to the petitioner, the company was incorporated with the objective of supporting marginal and small farmers by facilitating the procurement and marketing of agricultural produce, particularly paddy. It argued that the cancellation of its GST registration had severely affected its operations and, in turn, the livelihoods of numerous farmers dependent on the organization.
Reasons Behind the GST Return Default
The petitioner explained that the failure to file GST returns was neither intentional nor aimed at evading taxes. Instead, the delay occurred due to practical difficulties faced during the peak agricultural season.
The company further informed the Court that its appointed GST practitioner was unavailable during the relevant period, making timely compliance difficult. As a result, the monthly GST returns remained unfiled, eventually leading to cancellation of its GST registration.
Importantly, the petitioner submitted that it primarily dealt in exempt agricultural commodities. Therefore, the non-filing of returns did not result in any loss of tax revenue to the Government. It contended that the lapse was merely procedural and technical rather than a substantive violation involving tax evasion or fraud.
Challenge to the Cancellation Order
The company also challenged the cancellation order on the ground that it was a non-speaking order, meaning the authorities had failed to provide adequate reasons for rejecting its explanation.
The petitioner pointed out that it had submitted a detailed representation on 20 January 2026, explaining the circumstances that led to the delay in filing GST returns. However, the GST authorities allegedly ignored the representation and proceeded to cancel the registration without properly considering the company’s submissions.
Before the Court, the petitioner expressed its willingness to comply with all statutory requirements. It undertook to pay any outstanding tax, interest, or penalty determined by the department and assured the Court that it would regularly file GST returns in the future.
State’s Stand
The State opposed the writ petition by relying upon Section 29(2)(c) of the Central Goods and Services Tax Act, 2017, which empowers the authorities to cancel GST registration if a registered person fails to furnish returns for a continuous period of six months.
According to the State, the petitioner had admittedly defaulted in filing returns for the prescribed period. Therefore, the cancellation of GST registration was fully justified under the statutory provisions, and no special indulgence should be granted.
The State argued that prolonged non-compliance with GST filing requirements could not be condoned merely because the petitioner claimed operational difficulties.
Calcutta High Court’s Observations
Justice Smita Das De carefully examined the submissions made by both parties and observed that the petitioner had established a prima facie case warranting judicial interference.
The Court noted that denying the petitioner an opportunity to regularise its compliance would cause irreparable harm not only to the company’s business but also to the livelihoods of the farmers associated with it.
While recognizing the importance of statutory compliance under the GST law, the Court emphasized that procedural lapses should not permanently cripple a genuine business when there is no allegation of tax fraud or deliberate revenue loss.
The judgment reiterates that courts must strike a balance between enforcing legal obligations and ensuring that businesses engaged in legitimate economic activities are not subjected to disproportionate hardship.
Directions Issued by the Court
To achieve this balance, the Calcutta High Court directed the concerned GST authorities to:
- Assess the taxes, interest, and penalties payable by the petitioner.
- Permit the petitioner to deposit the determined statutory dues.
- Restore the GST registration with effect from the original date of registration after satisfaction of the statutory liabilities.
- Keep the GST portal operational for the limited purpose of enabling payment of dues and filing of pending GST returns.
- Allow the petitioner to continue filing future GST returns regularly after restoration.
With these directions, the writ petition was disposed of.
Significance of the Judgment
This ruling is particularly important for businesses whose GST registrations have been cancelled solely due to return filing defaults.
The decision reinforces the principle that GST registration cancellation should not become a punitive measure that destroys an otherwise genuine business, especially where the taxpayer is willing to rectify past defaults and comply with the law.
For Farmer Producer Companies and enterprises dealing in exempt agricultural commodities, the judgment also highlights that courts may consider the broader public interest, including the welfare of farmers and rural livelihoods, while exercising their writ jurisdiction.
Although taxpayers should ensure timely filing of GST returns, this decision demonstrates that genuine cases involving procedural defaults may still receive equitable relief from constitutional courts, provided the taxpayer shows bona fide intent and is prepared to discharge all statutory liabilities.
Case Title: Kanksa Farmer Producer Company Ltd. vs. Senior Joint Commissioner of Revenue & Appellate Authority
Case Number: WPA 6893 of 2026