2024 (7) TMI 418 - HC - GST

Legal Win: GST Registration Restored After Notice Fails to Specify Violations and Lacks Proper Reasoning

GREENTECH ENTERPRISES Versus COMMISSIONER CGST & ANR.

The HC set aside the order cancelling the petitioner's GSTIN due to procedural defects in the show cause notice. The court found the notice lacked ... Cancellation of registration of the petitioner - impugned SCN does not mention any reason for cancelling the petitioner’s GSTIN with retrospective effect - violation of principles of natural justice - HELD THAT:- A plain reading of the impugned SCN indicates that it does not meet the requisite standard of a show cause notice. Whilst it is alleged that the petitioner has not complied with the specified provisions of the ‘GST Act or the Rules made thereunder, the impugned SCN is not clear as to which provisions of the GST Act or Rules have been violated - The purpose of issuance of a show cause notice is to enable the noticee to respond to the allegations. The impugned SCN indicates that it is incapable of eliciting any meaningful response to the alleged violation. The impugned order is also bereft of any reasoning apart from stating no reply has been received to the impugned SCN, it does not indicate any reason for cancelling the GSTIN of petitioner - the impugned order is set aside - appeal allowed. Issues: Impugning order cancelling GSTIN, Compliance with GST Act and Rules, Validity of show cause notice, Lack of reasoning in impugned order.Analysis:1. Impugning Order Cancelling GSTIN: The petition challenges the cancellation of the Goods and Services Tax Identification Number (GSTIN) of the petitioner by the respondents. The impugned order dated 24.04.2023 cancelled the GSTIN of the petitioner based on the Show Cause Notice (SCN) dated 16.02.2023. The cancellation was due to the alleged non-compliance by the petitioner. However, the order was set aside by the court, directing the restoration of the petitioner's GSTIN registration.2. Compliance with GST Act and Rules: The impugned SCN accused the petitioner of non-compliance with unspecified provisions of the GST Act or Rules. The court noted that the SCN did not clearly specify which provisions were violated, rendering it inadequate for the petitioner to respond meaningfully. The lack of clarity in the allegations raised concerns about due process and fair treatment.3. Validity of Show Cause Notice: The court emphasized that a show cause notice should enable the recipient to understand the allegations and respond adequately. In this case, the impugned SCN failed to meet the required standard, as it did not specify the alleged violations clearly. This lack of clarity undermined the petitioner's ability to address the accusations effectively.4. Lack of Reasoning in Impugned Order: The impugned order lacked substantive reasoning for cancelling the petitioner's GSTIN. While it stated that no reply was received to the SCN, it did not provide any other justification for the cancellation. Additionally, the retrospective effect of the cancellation to 18.05.2022 raised questions, especially since the order indicated that the decision was made after considering the petitioner's submissions during the hearing.5. Conclusion: The court set aside both the impugned SCN and order, highlighting the deficiencies in the notice and the lack of reasoning in the cancellation decision. The restoration of the petitioner's GSTIN registration was ordered, with a clarification that the respondents could issue a fresh show cause notice if they intended to pursue further action. All rights and contentions of the parties were reserved, and the pending application was disposed of accordingly.