2023 (9) TMI 904 - HC - GST

GST Registration Dispute: Authorities Must Share Evidence and Provide Fair Hearing Before Cancellation Decision

MUHAMMAD SALMANUL FARIS K Versus THE SUPERINTENDENT, THE CGST & CENTRAL EXCISE RANGE, THE COMMERCIAL TAX OFFICE, OTTAPPALAM, KERALA

HC examined GST registration cancellation based on alleged fake invoicing. Court set aside original cancellation order, directing tax authorities to ... Cancellation of GST registration of petitioner - issuance of Invoices/Bills to other dealers without supplying goods or providing any services in violation of the GST Act and Rules - such misuse by the purchasing dealers for availment of the declaration of the input tax credit or refund of tax - petitioner did not make use of the opportunity of hearing and not produced any documents - HELD THAT:- There is no denial of fact that the DGGI, Kochi Zonal Unit has already taken the decision for cancelling the GST registration of the petitioner - the competent authority was only required to form the formalities and the authority concerned or the competent authority could not have taken an independent decision. Therefore, the impugned order is set aside. However, the said order is not revived further for a period of one month. The petitioner is directed to appear before the Superintendent of Central Tax & Central Excise, Ottapalam Range, Mettupalayam Street, Palakkad on 18.09.2023 with relevant records in his possession to dispute the allegation contained in the Show cause notice. The adverse materials collected against the petitioner must be given to him for adverting the same by him - Petition disposed off. Issues involved:The judgment involves the cancellation of GST registration due to alleged fake invoicing and availing of fake input tax credit. The primary issue is whether the cancellation of the GST registration was done following the due process of law and jurisdiction.Details of the judgment:The petitioner challenged the cancellation of their GST registration in the High Court. The cancellation was based on allegations of issuing invoices without supplying goods or services, leading to the misuse of input tax credit by purchasing dealers. The decision to cancel the registration was made following intelligence reports on fake invoicing. The petitioner received show cause notices but failed to appear for hearings, resulting in the cancellation of registration. The petitioner argued that the cancellation was without following due process and jurisdiction.The respondent contended that a cartel was operating to avail fake input tax credit, supported by intelligence inputs and investigations. The DGGI directed the cancellation of the GST registration based on these findings. Show cause notices were issued, but the petitioner did not utilize the opportunity for hearings or provide any documents. The respondent defended the cancellation based on non-compliance by the petitioner.The court acknowledged that the DGGI had already decided to cancel the registration, and the competent authority was only required to formalize the decision. The court set aside the impugned order but did not revive it immediately. The petitioner was directed to appear before the tax authorities with relevant records to dispute the allegations within a specified timeframe. The authorities were instructed to provide the petitioner with adverse materials collected and to pass a fresh order within three weeks. The petitioner's entitlement to restoration of the GST registration was contingent upon the outcome of the proceedings.The court emphasized that the tax authority should make an independent decision without being influenced by the DGGI's directive. With these directions, the writ petition was disposed of, providing a framework for further proceedings and decision-making.