2023 (11) TMI 248 - HC - GST

Cancellation of GST registration of petitioner - Registration has been obtained by means of fraud, wilful misstatement or suppression of facts - no reasons mentioned in impugned order for such cancellation - HELD THAT - The impugned order does not provide any reason as to why the petitioner s registration was cancelled except to state that the tax payer has not given any response. The impugned SCN did not contain any specific details as to the alleged fraud, wilful misstatement or the facts purported to have been suppressed by the petitioner. Clearly, the said SCN is vague and was incapable of eliciting any meaningful response. It is settled law that a show cause notice must state the reason to enable the noticee to respond to the allegation on the basis of which the adverse action is proposed. The impugned SCN has failed to satisfy the said standard and therefore, is liable to be set aside. As stated above, the impugned order does not reflect any reason for cancelling the petitioner s GST registration. The impugned SCN and the impugned order cancelling the petitioner s GST registration are set aside - the petitioner s GST registration shall be restored forthwith - petition disposed off.

Summary

Issues involved:
The issues involved in this case are the validity of a Show Cause Notice (SCN) calling for cancellation of GST registration and the subsequent order cancelling the registration due to lack of response from the taxpayer.

Validity of Show Cause Notice (SCN):
The petitioner challenged a Show Cause Notice (SCN) dated 03.12.2020 which called for the cancellation of their GST registration. The SCN alleged that registration was obtained through fraud, wilful misstatement, or suppression of facts. The petitioner was directed to respond within seven working days but the notice lacked specific details regarding the alleged violations. The High Court held that the vague nature of the SCN made it impossible for the petitioner to provide a meaningful response. It was emphasized that a show cause notice must clearly state the reasons for any adverse action proposed. As a result, the High Court set aside the SCN.

Cancellation of GST Registration:
Following the SCN, an order was passed on 05.01.2021 cancelling the petitioner's GST registration on the grounds that the taxpayer did not respond to the SCN. The High Court noted that the impugned order did not provide any specific reason for the cancellation apart from the lack of response. Since the SCN itself was vague and inadequate, the Court held that the order cancelling the registration was unjustified. Consequently, the High Court set aside the order cancelling the GST registration and directed for its immediate restoration.

Disposition:
The High Court disposed of the petition by setting aside both the Show Cause Notice and the order cancelling the GST registration. It was clarified that while the registration would be restored, the authorities could issue a fresh show cause notice and take appropriate action in accordance with the law.