GST registration cancellation quashed due to cryptic notice and procedural violations under Section 29 Rule 22(1)

The Gujarat HC allowed a petition challenging cancellation of GST registration, finding violation of natural justice principles. The court held that the Show Cause Notice (SCN) issued under Section 29 Rule 22(1) of GST Rules was cryptic and inadequate, following precedent in Aggarwal Dyeing case. The respondent failed to prove proper service of notice through registered AD post, with no acknowledgment receipt on record. The court noted insufficient time gap between notice dispatch and cancellation order, emphasizing that while GST officers have ample powers against law violators, prescribed procedures must be followed. The petition was allowed solely on grounds of procedural violations and inadequate notice content.

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Issues Involved:
1. Validity of the show cause notice and cancellation order under the CGST Act.
2. Alleged procedural lapses and violation of principles of natural justice.
3. Alternative remedy and jurisdiction of the High Court under Article 226.
4. Service of notice through registered post and WhatsApp.
5. Compliance with GST procedural rules, particularly Rule 25 and Rule 22(1).

Issue-wise Detailed Analysis:

1. Validity of the Show Cause Notice and Cancellation Order under the CGST Act:
The petitioner challenged the proceedings initiated by a show cause notice dated 10.05.2022, which led to the cancellation of the petitioner's GST registration. The show cause notice was issued under Section 29 of the CGST Act read with Rule 22(1) of the CGST Rules. However, the notice was not physically delivered nor received by the petitioner by post. The cancellation order dated 25.05.2022 did not record any reasons for the cancellation, merely stating that it was "as per the attached order."

2. Alleged Procedural Lapses and Violation of Principles of Natural Justice:
The petitioner argued that the show cause notice was unintelligible and did not provide sufficient details for a proper response. No personal hearing was granted, and the notice lacked the name and designation of the issuing authority. The petitioner attempted to upload a reply on the portal but found the notice unintelligible. The cancellation order and subsequent rejection of the revocation application were also devoid of specific reasons. The court found that the notice was a cryptic 'one line' notice and did not meet the procedural requirements, thus violating principles of natural justice.

3. Alternative Remedy and Jurisdiction of the High Court under Article 226:
The respondent argued that the petitioner failed to avail the alternative remedy of appeal under Section 107 of the GST Act. The court acknowledged that ordinarily, writ jurisdiction under Article 226 should not be entertained when an alternative remedy is available. However, the court held that the factual aspects demonstrated a violation of natural justice, justifying the exercise of its jurisdiction despite the availability of an alternative remedy.

4. Service of Notice through Registered Post and WhatsApp:
The respondent claimed that the show cause notice was served through RPAD and WhatsApp. The petitioner contended that service through WhatsApp is not permissible under the law. The court noted that even if service through registered post is presumed under Section 169 of the GST Act, the acknowledgment receipt was not on record. The court also highlighted that the procedural requirements for service through registered post were not fulfilled, as the acknowledgment receipt was not retained beyond three months by the postal department.

5. Compliance with GST Procedural Rules, Particularly Rule 25 and Rule 22(1):
The court emphasized the need for compliance with procedural rules under the GST Act. Rule 25 requires verification of business premises in the presence of the person and uploading of the verification report along with photographs. The court found that the respondent did not follow these procedures during the spot verification. The court also referred to its previous decision in Aggarwal Dyeing and Printing Works, which held that cryptic notices without detailed reasons are inadequate and violate principles of natural justice.

Conclusion:
The court quashed the show cause notice dated 10.05.2022 and the cancellation order dated 25.05.2022, citing procedural lapses and violation of natural justice. The court directed the respondent to re-issue the show cause notice with detailed reasons and provide a reasonable opportunity for the petitioner to respond. The petitioner's GST registration was ordered to be restored forthwith. The court's decision was based on the need for adherence to procedural rules and principles of natural justice, as well as the inadequacy of the cryptic notice issued by the respondent.

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