GST Registration Restored After Procedural Flaws Found in Cancellation Order Violating Natural Justice Principles HC allowed petition challenging GST registration cancellation. The court found the Show Cause Notice and cancellation order lacking specific allegations ...
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GST Registration Restored After Procedural Flaws Found in Cancellation Order Violating Natural Justice Principles
HC allowed petition challenging GST registration cancellation. The court found the Show Cause Notice and cancellation order lacking specific allegations and violating natural justice principles. GST registration was ordered restored, with directions that fresh proceedings could be initiated if warranted, ensuring procedural fairness for the petitioner.
Issues: Challenge to Show Cause Notice and Cancellation Order regarding GST registration.
Analysis: The petitioner challenged a Show Cause Notice (SCN) dated 13.11.2023 and a subsequent cancellation order dated 24.11.2023 regarding the cancellation of its Goods and Services Tax (GST) registration. The impugned SCN cited a violation of Rule 86B as the reason for proposing cancellation. The petitioner's GST registration was suspended, and later cancelled with retrospective effect from 03.04.2023. The petitioner appealed the cancellation order, which was dismissed on 30.05.2024. Despite having the remedy of appeal under Section 112 of the CGST Act/DGST Act, the petitioner couldn't utilize it due to the non-existence of the Goods and Service Tax Tribunal. Therefore, the High Court entertained the petition.
The impugned SCN and cancellation order lacked specific details of the allegations against the petitioner, merely citing a violation of Rule 86B without providing transaction specifics or invoice details. The cancellation order also mentioned non-functioning of the firm without providing a report copy or allowing the petitioner to respond. The Court emphasized that a show cause notice must clearly state reasons for adverse action to enable a meaningful response. Cancelling registration with retrospective effect and introducing new reasons beyond the SCN's scope violated principles of natural justice.
During proceedings, the petitioner offered to deposit any dues arising from selling dealers' activities and assured payment if Input Tax Credit was availed and suppliers didn't pay taxes. The impugned order noted the firm's existence during a field visit and submission of an undertaking regarding invoice issuance during registration suspension. The respondent's counsel claimed an error in the impugned order regarding a report dated 24.11.2023, but the Court found this contention baseless.
The High Court found merit in the petitioner's argument that cancellation based on cryptic allegations without specific details was unjust. Consequently, the petition was allowed, setting aside the cancellation order and SCN, directing the restoration of the petitioner's GST registration. The order clarified that fresh proceedings could be initiated in accordance with the law if adverse action was proposed against the petitioner. The petition was disposed of accordingly, including pending applications.
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