2024 (1) TMI 435 - HC - GST

Cancellation of registration of the petitioner with retrospective effect - registration obtained by means of fraud, wilful misstatement or suppression of facts - vague SCN - Violation of principles of natural justice - HELD THAT - Since it is held that the show cause notice and the order of cancellation are bereft of any details and are not sustainable, no purpose would be served in awaiting the outcome of the hearing on the application for revocation of cancellation. Since the very foundation of the proceedings i.e. show cause notice, is defective, further proceedings thereon shall be vitiated. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant - a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. The impugned show cause notice dated 10.07.2023 and the order of cancellation dated 25.08.2023 are set aside - Petition allowed.

Summary

Issues involved: Quashing of show cause notice and cancellation order regarding GST registration.

Summary:
The petitioner sought the quashing of a show cause notice and cancellation order regarding the registration, obtained on 12.05.2022, as a supplier of plastic granules and PVC Dana. The notice, dated 10.07.2023, alleged registration obtained through fraud, willful misstatement, or suppression of facts, without specifying the category. The cancellation order, dated 25.08.2023, was retrospective to 13.05.2022, lacking reasons or details. The court found both the notice and the order unsustainable due to lack of specifics and directed authorities to rectify errors in the portal for self-contained notices. The respondent's contention of fraud was based on an inspector's report claiming the petitioner's address was untraceable, which the petitioner disputed, requesting a revisit that was not conducted. The court held the proceedings defective, thus rendering further actions on the cancellation invalid. It emphasized that cancellation with retrospective effect should be based on objective criteria, not merely non-filing of returns, considering the impact on customers' input tax credit. The show cause notice and cancellation order were set aside, allowing the respondent to proceed lawfully with proper notice and hearing if cancellation with retrospective effect is pursued.