2023 (12) TMI 991 - HC - GST

Cancellation of G.S.T. registration of the petitioner - contention of the learned senior counsel is that immediately on receipt of the said show cause notice, the petitioner had immediately taken necessary steps and have filed entire returns up till date - HELD THAT - Though the Department has been granted couple of opportunities to seek instructions, the only oral instructions received by the learned counsel for the Department is to the extent that the order of cancellation does not seem to be on the grounds which were otherwise there in the show cause notice, dated 02.07.2020, but on the ground of the petitioner having fraudulently availed I.T.C. to the tune of Rs. 31 Crores. The learned senior standing counsel for the Department in this regard referred to the correspondence received from the Department, dated 30.05.2023. Taking into consideration the submissions made by the learned senior counsel for the petitioner that after the show cause notice having been issued, taking advantage of the circular of the Government of India extending the time of furnishing the returns, the returns have already been filed by the petitioner within the extended period of time, it is found difficult to sustain the impugned order (Annexure-P1), dated 25.08.2023. On this very ground alone, the impugned order, therefore, is not sustainable and the same deserves to be and is accordingly set-aside/quashed. The respondent authorities are directed to forthwith restore the G.S.T. registration of the petitioner. Petition allowed.

Summary

Issues involved:
The cancellation of Goods and Services Tax (G.S.T.) registration of the petitioner based on a show cause notice, the subsequent revocation application, the grounds for cancellation, and the legality of the actions taken by the respondent authorities.

Cancellation of G.S.T. Registration:
The impugned order of cancellation was based on a show cause notice issued on 02.07.2020, citing non-filing of returns for a continuous period of six months. The petitioner promptly filed all returns upon receiving the notice, attributing the delay to the COVID-19 pandemic circumstances. Despite timely submission within the extended period granted by the Government of India, the cancellation order was issued more than three years later, which the petitioner argued was erroneous, arbitrary, and unlawful.

Revocation Application and Delayed Decision:
Following the cancellation, the petitioner sought revocation under Section 30, Rule 23 of the Central Goods and Services Tax Act, 2017, emphasizing compliance with extended return submission deadlines. The respondent authorities failed to make a decision within the mandated one-month timeframe, while also issuing a notice for personal hearing post-cancellation, which was deemed unnecessary and coercive by the petitioner.

Contentions and Contradictions:
The Department asserted that the cancellation was not solely due to return non-filing but also because of alleged fraudulent Input Tax Credit (I.T.C.) availing amounting to Rs. 31 Crores. However, discrepancies emerged regarding the grounds for cancellation as per the show cause notice versus the actual reasons cited in the cancellation order. The lack of clarity and delayed actions cast doubt on the validity of the cancellation decision.

Judicial Decision:
Upon review, the Court found the cancellation order unsustainable, primarily due to the petitioner's compliance with extended return deadlines and the absence of evidence supporting the alleged fraudulent I.T.C. availing. The order was set aside, directing the restoration of G.S.T. registration. Additionally, the post-cancellation personal hearing notice was deemed unwarranted and ineffective in light of the judgment, leading to the allowance of the Writ Petition without costs.