2023 (7) TMI 706 - HC - GST

Cancellation of GST registration - it is claimed that the cancellation is not on the ground on which the show cause notice was issued - HELD THAT - There is much substance in the contentions as urged on behalf of the petitioners inasmuch as the impugned order cancelling the registration of the petitioners appears to be on a ground completely outside of scope of show cause notice issued to the petitioners. This would certainly cause prejudice to the petitioners as the petitioners never anticipated such reason as set out in the impugned order. It is opined that certainly a prejudice was caused to the petitioners considering the principles of natural justice. In the circumstances, the impugned order is required to be quashed and set aside with liberty to the respondents to issue a fresh show cause notice to the petitioners as permissible in law and after hearing the petitioners, an appropriate order in accordance with law be passed. Petition disposed off.

Summary

Issues involved:
The issues involved in the judgment are the quashing of suspension and cancellation of GST registration, the grounds for cancellation not being in line with the show cause notice, delay in appeal proceedings, and the principles of natural justice.

Quashing of Suspension and Cancellation of GST Registration:
The petition was filed to quash and set aside the impugned orders of suspension of GST Registration dated 24th June 2021 and Cancellation of GST Registration dated 12th July 2021. The counsel for the petitioners argued that the cancellation was not based on the grounds mentioned in the show cause notice, causing prejudice to the petitioners.

Delay in Appeal Proceedings:
The petitioners had filed an appeal before the Deputy Commissioners of State Tax almost one year ago, but no progress had been made except for the date of personal hearing being scheduled. The counsel mentioned that he had been instructed to withdraw this appeal, indicating a delay in the appeal process.

Principles of Natural Justice:
After hearing both parties and examining the impugned order, the court found that the cancellation of registration was based on a ground completely outside the scope of the show cause notice. This was deemed to cause prejudice to the petitioners as they were not given an opportunity to address this new reason. The court held that the impugned order needed to be quashed and set aside due to the violation of the principles of natural justice.

Court's Decision:
The court concluded that prejudice was caused to the petitioners and ordered the impugned order to be quashed. The respondents were given liberty to issue a fresh show cause notice, conduct a hearing, and pass an appropriate order in accordance with the law. The court directed that a notice be issued to the petitioners within three weeks, and the designated officer was instructed to pass an appropriate order within three weeks from the date of the hearing granted to the petitioners.