2024 (6) TMI 159 - HC - GST

Cancellation of petitioner's registration - business not conducted from declared place of business - non-existent firm - HELD THAT - When a show cause notice was issued to the petitioner on the basis of a letter dated 16.03.2024 issued by D.G.G.I., Lucknow, it was imperative for the authority to have provided a copy of the aforesaid letter dated 16.03.2024 to the petitioner to enable it to effectively defend itself. The requirement of principles of natural justice will be made only when the person affected is given a proper opportunity of hearing, which requires that the person concerned should be communicated the allegations against him and the material relied upon in support of allegation. The failure of the authority to provide a copy of the letter dated 16.3.2024 to the petitioner, denies adequate opportunity of hearing to the petitioner. Further, a bare perusal of the impugned cancellation order dated 04.04.2024 indicates that the Assistant Commissioner, State Tax, Sector-3 Gonda has started the order with the narration that he had been directed by the Additional Commissioner, Grade-1, State Tax, Ayodhya Zone, Ayodhya to immediately cancel the GST registration of the petitioner. Additional Commissioner, Grade-1 is an officer higher in rank to the Assistant Commissioner, State Tax - the authority which has passed the cancellation order and he is an officer even higher in rank than even the appellate authority Additional Commissioner, Grade-2 (Appeal), State Tax, Gonda. Although, the show cause notice was not accompanied by a copy of the letter of the D.G.G.I., the Assistant Commissioner, State Tax, Sector-3, Gonda stated in the impugned order dated 4.4.2024 that the petitioner did not render any clarification on the points on which D.G.G.I. had conducted an inquiry. In absence of points on which D.G.G.I. had made its inquiry and in absence of the findings of the inquiry having been communicated to the petitioner, the petitioner could not be expected to give any clarification on the points of inquiry conducted by the D.G.G.I. The impugned orders dated 04.04.2024 and 03.05.2024 are unsustainable in law - Petition allowed.

Summary

Issues involved:
The validity of the order cancelling the petitioner's registration u/s 29(2) of the Central Goods and Service Tax Act and the dismissal of the appeal u/s 2 of the same Act.

Validity of Order Cancelling Registration:
The petitioner, a registered entity, faced cancellation of its registration under the Central Goods and Services Tax Act. Initially, a notice was issued, and upon the petitioner's satisfactory reply, the proceedings were dropped. However, a subsequent notice was issued citing new reasons, including non-conduct of business and non-existence as per a D.G.G.I. report. The petitioner contended that the new notice was unreasonable given the previous resolution and lack of specific details in the new notice. The Assistant Commissioner relied on D.G.G.I.'s recommendation without providing the petitioner with an opportunity to clarify or defend against the allegations. The Additional Commissioner dismissed the petitioner's appeal against the cancellation order.

Principles of Natural Justice:
The failure to provide the petitioner with a copy of the D.G.G.I. letter and the Assistant Commissioner's reliance on higher authority's directions raised concerns about the independent application of mind. The absence of specific points from D.G.G.I.'s inquiry deprived the petitioner of a fair chance to respond. The court found these aspects unsustainable in law and quashed the cancellation order and the appeal dismissal.

Conclusion:
The High Court allowed the writ petition, quashing the cancellation order and the appeal dismissal. The authority was directed to initiate proceedings in compliance with natural justice principles.