2025 (12) TMI 431 - HC - GST

Writ Against GST Registration Cancellation Fails as Business Not Run from Declared Premises, Violating Rule 21A

The HC dismissed the writ petition challenging cancellation of the petitioner's GST registration. It upheld the appellate authority's findings that ... Cancellation of Petitioner’s GST registration - petitioner has not been conducting any business from his declared place of business - HELD THAT:- The findings of the learned appellate authority appear to be unimpeachable as there are serious doubts as to the place of business against the earlier premises alleged to have been declared by the petitioner at the time of grant of registration and also against the new premises in respect of which the petitioner itself has furnished two rental agreements of two different dates 25.11.2024 and 18.03.2025. The cancellation of GST registration of the petitioner has also been made on the ground that petitioner has not conducted any business from the declared place of business, which is in contravention of Rule 21A of the Rules - there are no ground to interfere with the impugned order of cancellation of GST registration of the petitioner as confirmed in the appeal. The instant Writ Petition is dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the cancellation of GST registration under Section 29 of the Central Goods and Services Tax Act, 2017 read with Rules 21 and 21A of the Central Goods and Services Tax Rules, 2017, on the ground of non-existence of the declared place of business and use of fake/forged documents, was valid and justified. 1.2 Whether any violation of principles of natural justice or non-consideration of relevant material vitiated the order of cancellation of GST registration as affirmed by the appellate authority. 1.3 Whether any ground was made out for interference by the High Court in exercise of writ jurisdiction with the appellate order upholding cancellation of GST registration. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of cancellation of GST registration under Section 29 read with Rules 21 and 21A Legal framework (as noticed and applied by the Court) 2.1 The cancellation order was passed under Section 29 of the Act read with Rule 21 of the Rules and Rule 22(3) of the Rules, on the ground that the registered person was not conducting business from the declared place of business and had obtained registration through fraudulent means. Interpretation and reasoning 2.2 The appellate authority, on the basis of a detailed report from the jurisdictional Assistant Commissioner of Central Tax, found that physical verification conducted by DGGI officers on 18.03.2025 at the originally declared place of business established that no such entity existed there and that no person with the petitioner's name had conducted any business from that premises. 2.3 The owner of the originally declared premises categorically stated that she had never rented the premises to the petitioner or to the firm in question, that a men's hostel had been operating there for eight years, and that the rental agreement relied upon for registration was fake and bore a forged signature. These proceedings were recorded in a panchanama dated 18.03.2025 and treated as substantiating the non-existence of the entity at the declared place of business. 2.4 The authority further found that the petitioner had applied for amendment of the place of business on 18.03.2025, the very date on which inspection was conducted, and that there were two inconsistent rental agreements for the alleged new premises from the same owner: one dated 25.11.2024 (submitted physically to the Superintendent) and another dated 18.03.2025 (uploaded on the portal). This inconsistency raised 'serious doubts' as to the genuineness of the documents. 2.5 The appellate authority concluded that the taxpayer had obtained registration fraudulently by uploading fake documents and that the cancellation under Section 29 read with Rule 21 had been carried out after following due process of law. The High Court specifically noted these findings and held them to be 'unimpeachable,' emphasizing the serious doubts arising both in relation to the original declared premises and the purported new premises. 2.6 The High Court also noted that cancellation was additionally founded on the ground that the petitioner had not conducted any business from the declared place of business, which was treated as a contravention attracting Rule 21A of the Rules. Conclusions 2.7 The Court held that the cancellation of GST registration was validly made under Section 29 of the Act read with Rules 21 and 21A of the Rules, based on cogent material demonstrating non-existence of the declared place of business, use of fake/forged rental agreements, and non-conduct of business from the declared premises. 2.8 The Court found no infirmity in the reasoning that the petitioner's registration was obtained and operated in a non-bona fide manner and that the grounds for cancellation were fully made out. Issue 2: Alleged violation of principles of natural justice and non-consideration of material Interpretation and reasoning 2.9 The petitioner contended that the cancellation was arbitrary, violative of natural justice, contrary to the third proviso to Section 29(2), based on surmises and conjectures, and that the appellate authority failed to consider documents regarding ongoing business activity including a verification report allegedly supporting the petitioner. 2.10 The appellate authority, however, recorded that the cancellation was carried out 'after due process of law' and that the petitioner failed to produce credible evidence to rebut the findings of non-existence of the declared place of business or to establish bona fide conduct of business. 2.11 The High Court, after examining the findings and materials referred to by the appellate authority, accepted that the competent authorities had considered the inspection report, the owner's categorical denial, the panchanama, and the contradictory rental agreements for the new premises. It did not find any basis to characterize the decision as arbitrary or based on conjectures. 2.12 The Court did not find any demonstrated breach of natural justice in the process leading to cancellation or in the appellate consideration, particularly when the petitioner's explanation and documents were found unreliable and inconsistent by the authorities. Conclusions 2.13 The Court rejected the plea that the cancellation order or the appellate order was vitiated by violation of principles of natural justice or by non-consideration of relevant material, holding that due process was followed and the petitioner failed to rebut the adverse findings. Issue 3: Scope of interference in writ jurisdiction with appellate order upholding cancellation Interpretation and reasoning 2.14 The Court confined itself to examining whether any legal or factual infirmity existed in the findings of the appellate authority that could warrant writ interference. 2.15 Upon considering the submissions and materials, the Court expressly held that there were 'no grounds to interfere' with the impugned order of cancellation as confirmed in appeal, noting the serious doubts regarding both the initial and amended places of business and the absence of credible rebuttal from the petitioner. Conclusions 2.16 The Court declined to exercise writ jurisdiction to disturb the appellate order and dismissed the writ petition, thereby affirming the cancellation of GST registration.