GST registration cancellation quashed due to procedural violations under Rule 25 of CGST Rules

The HC quashed the GST registration cancellation order after finding procedural violations. The tax authorities failed to issue proper notice under Rule 25 of CGST Rules requiring the petitioner's presence during premises verification. The State Tax Officer had previously confirmed the business unit's existence in an order dated 29.08.2022, making the subsequent show cause notice dated 20.09.2022 questionable. The petitioner had also notified authorities about change of business address with proper documentation. The court directed respondents to restore GST registration retrospectively from 20.09.2022 and allow filing of annual returns with applicable late fees.

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Issues Involved:
1. Cancellation of GST registration.
2. Rejection of application for revocation of cancellation.
3. Rejection of appeal by the appellate authority.
4. Rejection of review application by the appellate authority.
5. Compliance with Rule 25 of the CGST Rules, 2017.
6. Change of principal place of business.

Detailed Analysis:

1. Cancellation of GST Registration:
The petitioner sought to quash Order No.ZA011122002143S dated 05.11.2022, which canceled their GST registration with effect from 20.09.2022. The cancellation was based on the ground that the business premises were found non-functional during a field inspection.

2. Rejection of Application for Revocation of Cancellation:
The petitioner's application for revocation of the cancellation order was rejected by Order No.ZA0112220073297 dated 16.12.2022. The rejection was due to the petitioner's failure to file a reply to the notice within the specified time.

3. Rejection of Appeal by the Appellate Authority:
The appellate authority dismissed the petitioner's appeal on 18.08.2023 through Order No.234-37/GST/DCST/APP-II, stating it was devoid of any merit.

4. Rejection of Review Application by the Appellate Authority:
The review application filed by the petitioner was rejected on 17.11.2023 via Order No.383-86/GST-17/Appeal-II.

5. Compliance with Rule 25 of the CGST Rules, 2017:
The petitioner argued that the respondents did not adhere to Rule 25 of the CGST Rules, 2017, which mandates physical verification of business premises in the presence of the concerned person. The court found that the respondents violated Rule 25 as no prior notice was given to ensure the presence of the petitioner's employees during the verification.

6. Change of Principal Place of Business:
The petitioner changed its business address to Boulevard Shopping Complex, Ghat No.03/04, Boulevard Road, Srinagar, effective from 07.05.2023, and communicated this to the respondents with supporting documents.

Judgment Summary:

The court noted several key points:
- The respondents admitted that the petitioner was registered and had filed returns up to September 2022.
- The only ground for cancellation was the non-functionality of the business premises during inspections.
- The respondents did not follow Rule 25 of the CGST Rules, 2017, as no notice was issued for physical verification in the presence of the petitioner's employees.
- The appellate authority had previously confirmed the existence of the petitioner's business premises and ordered the restoration of the GST registration on 29.08.2022.
- The issuance of a new show cause notice on 20.09.2022, shortly after the restoration, was found to be unjustified and not supported by any new evidence.
- The show cause notice lacked details such as the official who visited the premises and the date of the visit, making it vague and unsigned.

Based on these observations, the court quashed and set aside the impugned orders:
- Order No.ZA011122002143S dated 05.11.2022
- Order No.ZA0112220073297 dated 16.12.2022
- Order No.234-37/GST/DCST/APP-II dated 18.08.2023
- Order No.383-86/GST-17/Appeal-II dated 17.11.2023

The court directed the respondents to restore the petitioner's GST registration retrospectively from 20.09.2022 and allow the petitioner to file the annual returns for the financial years 2021-22 and 2022-23 onwards with applicable late fees/interest. The petitioner was also instructed to apply afresh for GST registration at the new principal place of business, which should be considered strictly under the rules after fulfilling all terms and conditions.

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