2023 (5) TMI 850 - HC - GST

Cancellation of GST registration of petitioner - bogus firm - opportunity of hearing was not given to the petitioner - violation of principles of natural justice (audi alterem partem) - HELD THAT - Admittedly, the registration of the petitioner was cancelled on the basis of the survey dated 27.09.2019 with the report that the disclosed business place of the firm was not found and therefore, the firm is bogus. On the said basis, the registration was cancelled on 01.12.2020. The petitioner moved application for revocation of cancellation of the registration on 28.01.2021, but the same was rejected. Thereafter, on 26.04.2021, a show cause notice was issued to the petitioner to show cause as to why the revocation of cancellation of registration may not be rejected. This Court in APPARENT MARKETING PRIVATE LIMITED. VERSUS STATE OF U.P. AND 3 OTHERS 2022 (3) TMI 493 - ALLAHABAD HIGH COURT has held Though the notice for cancellation of registration may not be placed on a high pedestal of a jurisdictional notice, at the same time, unless the essential ingredients necessary for issuance of such notice had been specified therein at the initial stage itself, the authorities cannot be permitted to have margin or option to specify and/or improve the charge later. Impugned order cannot be sustained - petition allowed.

Summary

Issues:
The issues involved in the judgment are the cancellation of GST registration of a proprietorship firm, rejection of revocation application, and confirmation of rejection of revocation application.

Cancellation of GST Registration:
The petitioner's GST registration was canceled based on a survey that found discrepancies in the business place disclosed by the firm. The cancellation was challenged through a revocation application, which was subsequently rejected. The petitioner argued that the cancellation was illegal as it did not comply with the conditions mentioned in section 29(2) of the UP GST Act. The petitioner cited relevant judgments to support the contention that the cancellation lacked proper grounds and opportunity for hearing. The respondent, however, maintained that the orders were legally passed as the firm was deemed bogus due to discrepancies found during inspection.

Rejection of Revocation Application:
The revocation application filed by the petitioner was rejected without providing an opportunity for hearing, which the petitioner contended was against the provisions of the Act & Rules. The petitioner highlighted the timeline of events, pointing out that a notice issued after the rejection of the revocation application was procedurally incorrect. The petitioner argued that the orders lacked legal basis and violated the fundamental right to engage in lawful business activities. The Court referred to Section 29(2) of the Act, emphasizing that registration can only be canceled under specific conditions, none of which were proven in this case.

Judgment:
The Court, after considering the arguments presented by both parties, found that the cancellation of registration and rejection of revocation application were not in accordance with the law. Citing a previous judgment, the Court emphasized the importance of establishing valid grounds for cancellation and providing an opportunity for hearing before taking such actions. Consequently, the orders canceling the registration and rejecting the revocation application were quashed. The writ petition was allowed, giving the respondent authority the option to issue a fresh notice based on specific grounds mentioned under section 29(2) of the GST Act, ensuring a fair proceeding without prejudice from the current judgment.