GST registration cancellation overturned due to procedural irregularities in inspection reports and notice deficiencies

The HC allowed the writ petition challenging cancellation of GST registration under BGST Act, 2017 for allegedly non-existent business. The court found procedural irregularities in inspection reports, noting lack of essential details like date/time of inspection and failure to provide inspection reports with show-cause notice to the petitioner. Despite Appellate Authority upholding cancellation and post-revocation inspection confirming business non-functionality, the court identified discrepancies in inspection process. The court directed petitioner to pay outstanding dues within specified period for registration restoration and appear before Assessing Officer with payment proof. For appeal intentions, petitioner required to provide undertaking and pay percentage of total dues.

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Issues:
Cancellation of registration under the Bihar Goods and Services Tax Act, 2017 due to business being found non-existent.

Analysis:
The petitioner, an assessee under the BGST Act, challenged the cancellation of registration based on the business being non-existent. The cancellation was initiated after a show-cause notice and subsequent orders. The petitioner filed for revocation, which was denied. The Appellate Authority also upheld the cancellation. The petitioner contended that there were no details of the inspection provided in the notice or final order.

The petitioner argued that previous judgments by the court had interfered with similar cancellation orders. The Government Advocate referred to a supplementary affidavit detailing inspections that found the business non-existent. However, the court noted discrepancies in the inspection reports and photographs provided. The court found inconsistencies in the inspection process and lack of crucial details being shared with the petitioner.

The court highlighted that the inspection reports lacked essential information such as the date and time of inspection, and were not provided to the petitioner along with the show-cause notice. Additionally, a post-revocation inspection also found the business non-functional, but the court questioned the validity of this inspection based on procedural irregularities. The court also mentioned a government circular allowing for the resumption of registrations upon payment of dues.

Ultimately, the court directed the petitioner to pay any outstanding dues within a specified period to have their registration restored. The petitioner was instructed to appear before the Assessing Officer with proof of payment. If the petitioner intended to appeal the assessment order, they were required to provide an undertaking and pay a percentage of the total dues for registration restoration. The court allowed the writ petition with these conditions.

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