Writ petition dismissed as show cause notice contained adequate particulars, no natural justice violation found

The AP HC dismissed a writ petition challenging cancellation of CGST/APGST registration. Petitioner argued violation of natural justice principles to bypass alternative remedy requirements, citing Whirlpool Corporation precedent allowing writ petitions despite alternative remedies in cases involving fundamental rights violations, natural justice breaches, jurisdictional issues, or constitutional challenges. However, the court found the show cause notice dated 23.06.2023 contained adequate particulars regarding non-existent taxpayers from whom petitioner allegedly obtained bogus invoices, establishing proper procedural compliance and negating natural justice violation claims.

---

---

Issues:
Cancellation of registration under CGST/APGST Act, 2017 based on alleged violations of principles of natural justice and constitutional rights.

Analysis:
The petitioner, a business entity dealing with iron scrap, sought a writ of mandamus challenging the cancellation of its registration under the CGST/APGST Act, 2017 by the 1st respondent. The petitioner contended that the cancellation was illegal, arbitrary, and violated principles of natural justice and constitutional rights. The petitioner had been regularly filing returns and paying taxes as per the GST Act, after availing Input Tax Credit (ITC). The cancellation was proposed based on allegations that the suppliers of goods to the petitioner had availed ITC without actual receipt of goods, which the petitioner disputed. The petitioner argued that without inward receipt of goods, there could not be outward sales, and the allegations were baseless and contrary to the Assessment Order.

In response to the show cause notice, the petitioner filed detailed objections disputing the allegations and requesting the proposed action to be dropped. The petitioner highlighted the lack of incriminating material provided by the 1st respondent and the violation of principles of natural justice. The petitioner also mentioned not being properly advised to file a petition for revocation of registration under the CGST Act, 2017. During the hearing, the petitioner's counsel argued vehemently that the cancellation was based on erroneous grounds and violated natural justice.

The Government Pleader for Commercial Taxes argued that the writ petition was not maintainable as the petitioner had alternative remedies available under the GST Act, such as filing for revocation of cancellation or appealing against the impugned order. The Government Pleader contended that the show cause notice contained particulars of non-existent dealers from whom the petitioner allegedly obtained bogus invoices, refuting the petitioner's claim of non-supply of material and violation of natural justice.

The High Court considered the arguments and cited the Whirlpool Corporation case to address the issue of maintainability of the writ petition when alternative remedies are available. The Court noted that the petitioner relied on the violation of principles of natural justice to maintain the writ petition. Upon reviewing the show cause notice, the Court found that required particulars were provided, and the petitioner had not availed the alternative remedy to challenge the impugned order. Therefore, the Court dismissed the writ petition but allowed the petitioner to challenge the order by filing an application for revocation of cancellation or an appeal within 15 days.

In conclusion, while the writ petition was dismissed, the petitioner was granted an opportunity to challenge the cancellation of registration through alternative remedies within a specified timeframe, ensuring a fair opportunity for both parties to present their case.

---