Alleged related-party lease by company director and claimed fraudulent GST registration u/s29(2)(e); mandamus refused, writ dismissed.

An entity sought mandamus against the GST registering authority to act on an alleged unauthorised related-party leasing by an authorised director and to treat the registration as vitiated by fraud, wilful misrepresentation, or suppression under s. 29(2)(e) CGST Act. The HC held that inter se director disputes and alleged related-party transactions are remediable under ss. 188 and 241 Companies Act, and absent any board action or proceedings, the court could not presume a prima facie dispute or fraud. It further held cancellation for fraud requires the officer's own satisfaction on proved facts, not mere allegations. Mandamus was refused and the writ was dismissed.

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Issues Involved:
1. Fraudulent registration under GST Act.
2. Unauthorized leasing of company property.
3. Legal implications under Section 188 of the Companies Act, 2013.
4. Applicability of Section 241 of the Companies Act, 2013.
5. Conditions for cancellation of GST registration u/s 29 of the GST Act, 2017.

Summary:

Issue 1: Fraudulent registration under GST Act
The petitioner company sought a directive for the cancellation of GST registration obtained by respondent No. 3, M/s Asian Packaging, on grounds of fraud, willful misrepresentation, and suppression of facts as per Section 29 (2) of the GST Act, 2017.

Issue 2: Unauthorized leasing of company property
The petitioner argued that respondent No. 4, an authorized Director of the petitioner company, formed a partnership and leased out the company's property to M/s Asian Packaging without proper authorization or a formal resolution from the company.

Issue 3: Legal implications under Section 188 of the Companies Act, 2013
The petitioner contended that the actions of respondent No. 4 violated Section 188 of the Companies Act, 2013, making the rent deed unauthorized and illegal, thereby constituting fraud and willful misrepresentation.

Issue 4: Applicability of Section 241 of the Companies Act, 2013
The court noted that disputes between directors should be addressed under Section 188 (3), 188 (4), and 188 (5) of the Companies Act, 2013, through proceedings u/s 241. However, no such action was taken by the petitioner company.

Issue 5: Conditions for cancellation of GST registration u/s 29 of the GST Act, 2017
The court highlighted that cancellation of GST registration can occur if the proper officer, either suo moto or on application, concludes that the registration was obtained by fraud, willful misrepresentation, or suppression of facts. The court found no evidence of such actions by respondent No. 4 and noted that the petitioner had not initiated any relevant proceedings or resolutions.

Conclusion:
The court dismissed the writ petition, stating that it could not presume fraud or misrepresentation based solely on the petitioner's statements without any supporting actions or evidence. The prayer for issuing mandamus to respondent No. 2 was denied. Pending applications were also disposed of.

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