2024 (11) TMI 657 - HC - GST

GST Registration Suspension Overturned: Natural Justice Principles Upheld, Respondent Directed to Reconsider Petitioner's Reply

Tvl. A.V. Traders, Represented by its Proprietor Mr. Ajith Kumar Versus The Commercial Tax Officer, Chennai

HC found the GST registration suspension unlawful. The court determined the respondent violated natural justice principles by suspending registration ... Cancellation of GST number of the petitioner - violation of constitutional right - HELD THAT:- Admittedly, it is the right of the petitioner to carry on the business and it is the bounden duty of the respondent to provide the GST registration in the manner known to law. Even, if the petitioner company indulged in allegedly obtaining Section 29(2)(e) registration by means of fraud or not conducting the business from declared place in violation of provisions of the Act, the respondent can very well initiate legal action by invoking civil and penal provisions by way of civil and criminal cases. Instead of doing so, the respondent has outrightly cancelled the GST registration of the petitioner - in the present case, the respondent without resorting to take legal action invoking penal provisions, suspended the GST registration of the petitioner and deprived the petitioner from carrying on the business, which amounts to violation of fundamental right of the petitioner and prevented the petitioner, which, cannot be sustained. In the present case, the suspension order was passed on 05.09.2024, for which, admittedly, the petitioner has filed their reply on 12.09.2024. When the reply was filed by the petitioner pursuant to the impugned order, it is incumbent upon the respondent to consider the same and pass appropriate orders in accordance with law. It appears that the respondent has passed the impugned order without considering the reply submitted by the petitioner - the impugned proceedings dated 05.09.2024 are liable to be set aside. The impugned proceedings dated 05.09.2024 are set aside and the respondent is directed to consider the petitioner's reply dated 12.09.2024 and pass appropriate orders on merits and in accordance with law to revoke the suspension of GST registration - Petition disposed off. Issues:Challenging suspension of GST registration and show cause notice for cancellation of GST number.Analysis:The petitioner challenged the suspension of their GST registration and the show cause notice issued for cancellation. The petitioner argued that despite filing a reply to the notice, the respondent had not taken any decision to revoke the suspension. The petitioner contended that they were a genuine company complying with tax laws but were unable to carry on business due to the suspension, which violated their constitutional right to trade. The petitioner criticized the respondent for suspending the registration without proper legal action and argued that this action infringed on their fundamental right to conduct business.The court noted that while the state could impose reasonable restrictions on trade, the respondent's action of suspending the GST registration without following legal procedures was a violation of the petitioner's fundamental rights. The court emphasized that if the petitioner had violated any provisions, the respondent should have initiated legal action instead of suspending the registration outrightly. The court held that the suspension order was passed without considering the petitioner's reply, which was against the principles of natural justice. The court concluded that the respondent's actions were unjustified and directed them to consider the petitioner's reply and revoke the suspension in accordance with the law.In the final judgment, the court set aside the impugned proceedings dated 05.09.2024 and directed the respondent to review the petitioner's reply and make a decision on revoking the suspension of GST registration. The court disposed of the writ petition with no costs, closing the connected miscellaneous petition.