Can Non-Restoration of GST Registration be considered a violation of Right to Livelihood?

Goods and Services Tax (GST) was introduced in India on July 1, 2017, as a comprehensive tax system that replaced all the previous indirect taxes. GST is a destination-based tax system, which means that it is levied on the consumption of goods and services. GST registration is mandatory for businesses that have a turnover of more than Rs. 20 lakhs per annum.

However, sometimes a registered person may fail to comply with the GST provisions, which may result in the cancellation of their registration. The cancellation of GST registration can have significant consequences for businesses, as it may result in the loss of their right to livelihood.

Non-Restoration of GST Registration: Violation of the Right to Livelihood?

The right to livelihood is a fundamental right enshrined in the Indian Constitution under Article 21. It states that every person has the right to practice any profession, occupation, or trade for their livelihood. The right to livelihood is an essential aspect of the right to life and personal liberty.

The cancellation of GST registration can have a severe impact on the right to livelihood of businesses. Non-restoration of GST registration can also be considered a violation of the right to livelihood, as it can result in the loss of income and employment opportunities for businesses and their employees.

The GST Act, 2017, specifies the circumstances under which a person's registration can be canceled. The cancellation of registration can be initiated by the Tax Officer or the registered person. The Tax Officer can cancel the registration if the registered person has not filed their GST returns for a continuous period of six months or more.

However, the cancellation of GST registration does not mean that the registered person is barred from carrying on their business activities. They can continue their business activities as an unregistered person, but they will not be allowed to collect GST from their customers or claim input tax credits.

Consequences of Non-Restoration of GST Registration

The non-restoration of GST registration can have significant consequences for businesses, as it affects their ability to carry on their business activities. Some of the consequences of non-restoration of GST registration are:

Loss of Input Tax Credit: An unregistered person cannot claim input tax credits on their purchases. This makes their business activities more expensive, as they have to pay the entire tax liability on their purchases.
Limited Business Opportunities: Many businesses prefer to deal with registered persons, as they can claim input tax credits. This limits the business opportunities for unregistered persons.
Limited Access to Loans: Banks and financial institutions prefer to lend to registered persons, as they are more reliable and have a better credit score. An unregistered person may find it challenging to get loans or credit facilities from banks and financial institutions.

Conclusion

The non-restoration of GST registration can have significant consequences for businesses, as it affects their ability to carry on their business activities. It can also be considered a violation of the right to livelihood, as it can result in the loss of income and employment opportunities for businesses and their employees. Therefore, it is essential for businesses to comply with the GST provisions and ensure timely filing of their GST returns to avoid the cancellation of their registration.