2023 (4) TMI 427 - HC - GST

Cancellation of GST registration of petitioner - petition dismissed on the ground of limitation - HELD THAT - From the perusal of the show cause notice and the reasons assigned for cancelling the registration, it is clear that the two are different and distinct which is clearly arbitrary. Even otherwise, the reasons recorded for cancellation are not mentioned in Section 29 of the UPGST Act. Thus, holding that the order dated 20.07.2022 is wholly arbitrary and also in violation of the principles of natural justice and also contrary to the provisions of Section 29 of the Act, the same cannot be sustained. The order dated 20.07.2022 is quashed leaving it open to the respondents to pass a fresh orders, if so advised in accordance with law. The writ petition stands allowed.

Summary

Issues involved:
The issues involved in the judgment are the cancellation of GST registration u/s 29 of the UPGST Act, arbitrary dismissal of appeal on the ground of limitation, and violation of principles of natural justice.

Cancellation of GST Registration:
The petitioner challenged the order dated 31.01.2023 and 20.07.2022, where the registration of the petitioner under GST was cancelled. The show cause notice mentioned non-filing of DRC-03 for interest liability as the reason for proposing cancellation. However, the order cited the firm's non-existence at the given address as the reason for cancellation. The petitioner argued that the reasons for cancellation differed from those in the show cause notice, which is against the principles of natural justice. The court found the cancellation order arbitrary, not in compliance with Section 29 of the UPGST Act, and in violation of natural justice. Consequently, the order dated 20.07.2022 was quashed, allowing the respondents to pass fresh orders if necessary.

Arbitrary Dismissal of Appeal:
The petitioner's appeal against the cancellation order was dismissed on the ground of limitation. The counsel argued that this dismissal was unjustified. The court agreed that the dismissal on the ground of limitation was unwarranted, especially considering the discrepancies between the show cause notice and the reasons for cancellation. The dismissal was deemed arbitrary and not in line with legal principles.

Violation of Principles of Natural Justice:
The court found that the cancellation order was arbitrary and violated the principles of natural justice. It was observed that the reasons for cancellation were not in accordance with the show cause notice and were not mentioned in Section 29 of the UPGST Act. The adjudicating authority had exceeded the scope of the allegations in the show cause notice, which was deemed unfair to the petitioner. The order was quashed on these grounds, emphasizing the importance of adhering to natural justice principles in such matters.