Blog No. 48: Quashing order of cancellation of GST Registration solely for violation of principles of natural justice

/ Blogs / By

Hon’ble Gujarat High Court quashed the order for cancellation of GST Registration for the reasons of violation of principles of natural justice.

 

  1. The applicant was served with show cause notice to cancel the registration under the CGST Act. In response to this show cause notice the applicant submitted that the SCN does not contain any reason for cancellation of registration.

 

  1. Court has observed that the SCN issued is breft of any material particulars and also that sufficient opportunity is not given at the time of adjudication.

 

  1. It was held that there has been violation of principles of natural justice while cancelling the GST registration. Hence, writ was allowed and orders cancelling the GST registration was quashed.

 

Read about the case Pantone Enterprises Private Limited Vs Union of India below:

 

Facts of the Case

  1. A show cause notice was served on 07.03.2021 in Form GST REG-17/31 specifying that the registration has obtained by means of fraud, wilful mis-statement or suppression of facts.

 

  1. Reply to show cause notice was submitted on 12.03.2021 wherein it was stated that basis of arriving at conclusion specified in the SCN has not been provided. It was prayed to withdraw the SCN.

 

  1. On account of pandemic situation, a request for virtual hearing was made.

 

  1. Order for cancellation of GST Registration was passed on 17.03.2021 stating that this office has received instructions from Preventive Section, HeadQuarter, Gandhi Nagar Commissionerate that the registration has been obtained by means of fraud, wilful mis-statement or suppression of facts. Said order was passed without affording an opportunity of personal hearing in the matter.

 

  1. On 05.04.2021, application for revocation of GST registration was filed. It was stated that neither the reasons for arriving at aforesaid conclusion were specified in show cause notice nor an opportunity for personal hearing was given. It was further stated that the officer has obviated the instructions issued by CBIC.

 

  1. A SCN was issued on 08.04.2021 wherein it was mentioned that a search was conducted at your premises by the preventive section, Gandhi Nagar Commissionerate and it was found that the firm is non-operational; no business activity is being carried out. The reply was filed on 12.04.2021. Ignoring the reply, application for revocation of cancellation of registration was rejected vide order dated 27.04.2021.

 

  1. An appeal was filed before Additional Commissioner (Appeals) on 07.05.2021 wherein above-mentioned contentions were raised. However, the appeal was rejected vide order dated 02.03.2022.

 

  1. Accordingly, a writ petition was filed before jurisdictional High Court.

 

Observations of High Court

 

  1. Hon’ble court observed that the show cause notice is bereft of any material particulars; despite requesting for personal hearing in the matter, the opprtunity was not provided; order for cancellation lacks reasons; the reasons assigned are without any basis assigned in the show cause notice; the appellate authority has failed to address to the grounds raised by the petitioner more particularly absence of opportunity of personal hearing as well as non-adherance to the instructions issued by CBIC during pandemic.

 

  1. Show Cause Notice, Registration Cancellation Order, Revocation Order and Appeal order was quashed and set aside. Liberty is given to department to issue fresh SCN as well as to furnish any material piece of evidence. Sufficient opportunity should be given to the petitioner to represent the case and thereupon, a speaking order shall be passed.

 

Paksh Remarks

  1. It has been observed that show cause notices for cancellation of GST Registration are being issued either without specifying the reasons or if reasons are specified, said reasons does not find its mention in the provisions of section 29 of the GST Act read with Rule 21, Rule 21A of GST Rules.

 

  1. It is also observed that in some cases the taxpayers do not file application for revocation of cancellation of registration or appeal before first appellate authority, as the case may be, which ultimately deprives them of availing any statutory remedy.

 

  1. In such type of cases, based on the records i.e., Show Cause Notice, Reply to the said notice, manner of issuing the cancellation order and the order of cancellation of registration, a case can be made out to approach the writ court seeking appropriate relief(s) so that business statutory claims does not lose validity.
 

Disclaimer

Website contains general information only and Paksh Legal is not, by means of this document, inviting, rendering , business, legal, tax, or other professional advice or services. The Bar Council of India does not permit advertisement or solicitation by advocates in any form or manner. By accessing this website, www.pakshlegal.in, you acknowledge and confirm that you are seeking information relating to Paksh Legal of your own accord and that there has been no form of solicitation, advertisement or inducement by Paksh Legal or its members. This document is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. The content of this website is for informational purposes only.

I accept to above Disclaimer