2024 (2) TMI 479 - HC - GST

GST Registration Cancellation Overturned: Procedural Flaws and Insufficient Notice Invalidate Tax Authority's Punitive Action

Satendra Versus Superintendent Circle -152, Central Goods And Services Tax & Anr.

HC found the GST registration cancellation order invalid due to procedural deficiencies. The Show Cause Notice lacked specific details about alleged tax ... Cancellation of GST registration of the petitioner - wrongful availment or utilization of input tax credit or refund of tax - issuance of invoice or bill without supply of goods and/or services - HELD THAT:- In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically - Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer’s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent’s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. The impugned order set aside - petition allowed. Issues:The judgment involves the cancellation of GST registration of the petitioner with retrospective effect, based on a Show Cause Notice alleging wrongful availment of input tax credit or refund of tax without providing specific details.Analysis:The Show Cause Notice issued to the petitioner lacked specific details regarding the alleged issuance of invoices or bills without supply of goods/services, leading to wrongful availment of input tax credit or refund of tax. The notice was found to be generic and lacking in particulars, indicating the use of a template without clarity on the petitioner's actions.The impugned order for cancellation of GST registration retrospectively was deemed unjustified as it did not provide reasons or quantify the wrongful availment of input tax credit. Additionally, the order did not specify any officer's name or designation who issued the notice, leading to procedural irregularities.The judgment highlighted the necessity for objective criteria in canceling GST registration retrospectively, emphasizing that mere non-filing of returns does not warrant retrospective cancellation. It was noted that the consequences of retrospective cancellation, such as denial of input tax credit to customers, must be considered by the proper officer.The Court set aside the Show Cause Notice and impugned order due to lack of reasoning and particulars, allowing the respondent to take further lawful action, including cancellation with retrospective effect, provided a proper Show Cause Notice and opportunity for hearing are given to the petitioner.The respondents were not prohibited from recovering any due tax, penalty, or interest from the petitioner in accordance with the law. The petition was disposed of with the above terms, ensuring procedural fairness and legal compliance in further actions by the respondent.