2023 (5) TMI 172 - HC - GST

Tax Authority Must Provide Clear Show-Cause Notice and Fair Hearing Before GST Registration Suspension Under Rule 21

HC ruled on GST registration suspension, directing tax authority to provide clear show-cause notice and allow petitioner an opportunity to respond. The ... Seeking restoration of registration of petitioner - case of Revenue is that petitioner may be relegated before the proper officer/respondent No.3 to offer his reply and if so directed, an appropriate decision would be taken by the proper officer within a stipulated time period - HELD THAT:- Without delving into the merits of the case of the parties, it may, however, be observed that the show-cause notice lacks in any detail of the alleged contravention, i.e. the tax period, the amount of tax or interest unpaid by the petitioner for any definite tax period. However, the petitioner has also stated that on the date fixed, i.e. on 28.02.2023 on his appearance no details have been provided and as such, no adjudication order has been passed on the impugned show-cause notice till date which has caused continuous sufferance of the business of the petitioner since 21.02.2023. It is opined that at the first instance, the petitioner should appear before the proper officer/respondent No.3 with his reply taking all available grounds of fact and law, if any, on 06.05.2023 at 10.30 a.m. The proper officer/respondent No.3 would, on appearance of the petitioner and submission of his reply to the impugned show-cause notice take a decision in accordance with law after giving an opportunity to the petitioner for personal hearing, if any adverse order is to be passed. The writ petition is disposed off. Issues involved:The issues involved in the judgment are suspension of GST registration by the tax authority without detailed clarification or quantification of alleged contraventions, violation of Article 19(1)(g) of the Constitution of India, and the challenge to the show-cause notice on jurisdictional grounds.Suspension of GST Registration:The petitioner, a regular taxpayer under the GST regime, had their registration suspended by the tax authority for alleged non-payment of tax, interest, or penalty beyond the due date. The petitioner contended that they had been compliant with filing returns and paying taxes on time, with no evidence of suppression or mis-declaration. The show-cause notice lacked specific details of the alleged contraventions, causing uncertainty for the petitioner and hindering their business operations. The petitioner argued that the suspension was improper and in violation of the provisions of the State Goods and Services Tax Act and Central Goods and Services Tax Act.Jurisdictional Grounds and Relief:The petitioner challenged the show-cause notice on jurisdictional grounds, claiming it was vague and did not allow for a proper response. The respondent argued that the petition was premature and the petitioner should first respond to the notice before seeking judicial intervention. The court, without delving into the merits of the case, directed the petitioner to appear before the proper officer with a reply, providing all available grounds of fact and law. The proper officer was instructed to make a decision within a week of the petitioner's appearance, either revoking the suspension if unwarranted or proceeding with adverse action if necessary. The petitioner was granted the liberty to seek further legal remedies if aggrieved by the decision.Disposition of the Writ Petition:The court disposed of the writ petition based on the lack of detail in the show-cause notice and the need for the petitioner to respond before any further judicial action. The court emphasized that its observations did not prejudice the petitioner's case and instructed the State to communicate the order to the proper officer promptly. Both parties were directed to receive a copy of the order without delay, and any pending applications were also disposed of accordingly.