2023 (11) TMI 598 - HC - GST

Cancellation of GST registration of petitioner - registration obtained by means of fraud, wilful misstatement or suppression of facts - Vague SCN - Principles of natural justice - HELD THAT - There is no explanation as to why the buyers and suppliers have been found to be suspicious. Merely because the petitioner s shop was found closed, absent anything more, is not a ground for cancellation of petitioner s GST registration. The impugned order cancelling the petitioner s GST registration is set aside - Petition allowed.

Summary

Issues involved: Impugning an order cancelling GST registration u/s fraud, wilful misstatement, suppression of facts without proper particulars, premature cancellation, retrospective effect, cryptic reasons for cancellation.

Impugned Order Cancelling GST Registration:
The petitioner challenged an order cancelling their GST registration dated 23.05.2022, based on a Show Cause Notice (SCN) alleging fraud, wilful misstatement, or suppression of facts. However, the SCN lacked specific details regarding the alleged misconduct by the petitioner, leading to a lack of clarity in the reasons for cancellation.

Premature Cancellation and Lack of Specifics:
Despite being granted seven working days to respond to the SCN, the GST registration was cancelled prematurely, only four days after the notice. The impugned order cited inadequate response to queries, absence of documentary evidence, and non-appearance for a personal hearing as reasons, without specifying the alleged fraud or misstatement by the petitioner.

Retrospective Effect and Unclear Reasons:
Although the SCN did not propose retrospective cancellation, the registration was cancelled with effect from the date of its grant in 2018. The respondents cited vague reasons like the petitioner being non-functioning, suspicious buyers and suppliers, and unresponsive contact number, which were deemed insufficient grounds for cancellation without further explanation.

Judgment and Relief Granted:
The High Court allowed the petition, setting aside the impugned order and directing the restoration of the petitioner's GST registration. However, the judgment clarified that this decision did not prevent the respondents from taking lawful action if the petitioner was found to violate statutory provisions in the future. The petition was disposed of accordingly.