2024 (2) TMI 287 - HC - GST

Business Registration Canceled After Fraud Allegations: Petitioner Fails to Provide Substantive Evidence Challenging Cancellation Decision

Shri Sainath Steel Through Partner Manoj Kumar Gupta Versus The State Of Madhya Pradesh, Gst Appellate Authority, Indore Circle – 3 And Joint Commissioner, State Tax, Deputy Commissioner Of State Tax, Indore

Shri Sainath Steel Through Partner Manoj Kumar Gupta Versus The State Of Madhya Pradesh, Gst Appellate Authority, Indore Circle – 3 And Joint ... Issues involved: Challenge to the order of cancellation of registration on grounds of violation of principles of natural justice.Summary:Issue 1: Violation of principles of natural justiceThe petitioner challenged the order of cancellation of registration, arguing that it was passed in violation of the principles of natural justice. The show cause notice was deemed vague as it only mentioned grounds of 'fraud, wilful misstatement or suppression of facts' without specifying details. The petitioner contended that the lack of specific facts regarding these grounds rendered the impugned orders invalid and should be set aside.Issue 2: Compliance with procedural requirementsIn response, the respondent's counsel asserted that a show cause notice was issued to the petitioner in accordance with section 29(2)(e) and Rule 22 of the CGST Rules, 2017. The notice was issued in the prescribed proforma, as per the provisions allowing cancellation of registration in cases of fraud, wilful misstatement, or suppression of facts. The petitioner, however, did not submit a reply to the notice.Issue 3: Findings and decisionUpon a spot inspection, the proper officer reported that no operational unit was found at the registered business location. A statement from a partner of the firm confirmed the closure of the unit. Based on these findings, the authorities concluded that the registration was obtained through fraud or wilful misstatement, justifying the cancellation under section 29(2) of the CGST Act. Despite being given an opportunity to respond, the petitioner did not provide any evidence to refute these findings.Conclusion:The Court found no grounds for interference under Article 227 of the Constitution, as both authorities had concurred that the registered unit was non-operational. The lack of evidence or documentation from the petitioner to demonstrate the unit's functionality further supported the decision to cancel the registration. Consequently, the petition was dismissed, upholding the cancellation of registration based on the established findings and lack of rebuttal by the petitioner.