Show-cause notice and GST cancellation quashed for vagueness, defective service and failure to follow Section 29(2)

HC allowed the petition and quashed the show-cause notice dated 01.07.2022 and the cancellation order dated 15.07.2022. The court found the notice vague and cryptic, the statutory reasons under Section 29(2) were not adequately provided, and service was defective (no RPAD; petitioner denied receipt of the prior notice dated 30.06.2022). In light of similar precedents, the HC held natural justice was not observed and set aside the cancellation of GST registration.

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Issues Involved:
1. Validity of the show-cause notice dated 01.07.2022.
2. Validity of the cancellation order dated 15.07.2022.
3. Adequacy of notice service to the petitioner.
4. Opportunity for the petitioner to respond and appeal.

Summary:

Issue 1: Validity of the Show-Cause Notice Dated 01.07.2022
The petitioner challenged the show-cause notice dated 01.07.2022 issued under Section 29 of the GST Act read with Rule 22(1) of the GST Rules, 2017, arguing that it was vague and lacked specific details necessary for a proper response. The Court observed that the notice was indeed vague and cryptic, making it difficult for the petitioner to respond. The notice merely stated, "In case, Registration has been obtained by means of fraud, wilful misstatement or suppression of fact," without providing any specific details or evidence.

Issue 2: Validity of the Cancellation Order Dated 15.07.2022
The petitioner also contested the cancellation order dated 15.07.2022, arguing that it lacked assigned reasons and was based on the vague show-cause notice. The Court found that the cancellation order did not provide specific reasons for the cancellation of registration under Section 29(2) of the GST Act, thus failing to meet the legal requirements for such an order.

Issue 3: Adequacy of Notice Service to the Petitioner
The petitioner claimed not to have received the show-cause notice dated 30.06.2022, which the respondent argued was affixed on the door of the petitioner's closed premises. The Court noted that the notice was not sent by RPAD and there was no material to suggest that the petitioner had received it. This procedural lapse further invalidated the cancellation proceedings.

Issue 4: Opportunity for the Petitioner to Respond and Appeal
The Court highlighted that the petitioner was not given a fair opportunity to respond to the show-cause notice due to its vague nature and the improper service of the notice dated 30.06.2022. The Court referenced similar cases where vague notices were deemed insufficient for legal proceedings, thus setting a precedent for quashing such notices and orders.

Conclusion:
The Court quashed both the show-cause notice dated 01.07.2022 and the cancellation order dated 15.07.2022, directing the respondent authorities to issue a fresh notice with detailed reasons and provide a reasonable opportunity for the petitioner to respond. The registration of the petitioner was ordered to be restored forthwith.

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