GST Registration Restored After Procedural Defects Found in Show Cause Notice and Cancellation Order

HC allowed the petitioner's challenge to GST registration cancellation. The court found the Show Cause Notice and cancellation order deficient in substantive details. Registration was reinstated, with directions for proper reconsideration of the amendment application. The respondents retain rights to pursue tax recovery through appropriate legal mechanisms.

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Issues:
The judgment involves the cancellation of GST registration of the petitioner with retrospective effect, based on alleged violations under Rule 21(b) of the Goods and Services Tax Act, 2017.

Cancellation of GST Registration:
The petitioner, engaged in the business of manufacturing and trading of garments, applied for a change of business premises and amendment of the registered address. However, due to a notice seeking additional information which the petitioner claimed to be unaware of, the application was rejected for lack of response. Subsequently, a Show Cause Notice was issued citing violation of Rule 21(b) for issuing invoices without the supply of goods or services. The registration was cancelled retrospectively from 03.12.2021.

Judicial Analysis:
The court observed that the Show Cause Notice and the impugned order lacked details of the alleged violations, rendering them unsustainable. It emphasized that registration cannot be cancelled with retrospective effect mechanically, and must be based on objective criteria, not merely non-filing of returns. The court highlighted the importance of considering the consequences of retrospective cancellation on the taxpayer's customers' input tax credit.

Decision and Directions:
The court set aside the impugned order and Show Cause Notice, restoring the petitioner's GST registration. It directed compliance with Rule 23 of the Central Goods and Services Tax Rules, 2017. Additionally, the order rejecting the application for amendment of the registered address was also set aside, with instructions for reconsideration by the Proper Officer. The Proper Officer was directed to consider the documents submitted by the petitioner and request further documents if necessary. The respondents were allowed to take further legal action for recovery of taxes, penalties, or interest due from the petitioner.

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