2024 (6) TMI 953 - HC - GST

Maintainability of petiton - alternative remedy u/s 30 of GST Act to file an application - Cancellation of GST registration of the petitioner - violation of principles of natural justice and violative of Articles 19 and 21 of the Constitution of India - HELD THAT - Hon ble Apex Court in WHIRLPOOL CORPORATION VERSUS REGISTRAR OF TRADE MARKS, MUMBAI ORS. 1998 (10) TMI 510 - SUPREME COURT held that in certain contingencies viz., when writ petition is filed for enforcement of fundamental rights, or where there has been a violation of principles of natural justice or when the proceedings impugned are wholly without jurisdiction or the vires of an act is challenged, the writ petition could be maintainable in spite of availability of alternative remedy. In the instant case the petitioner banks upon the violation of principles of natural justice to maintain the writ petition. In this context, a perusal of the show cause notice dated 22.06.2023 shows that the 1st respondent has given required particulars of the non-existent tax payers from whom the petitioner allegedly obtained bogus tax invoices. Admittedly, the petitioner has alternative remedy to challenge the impugned order which he did not avail. Therefore, no order deserved in the writ petition. However, considering that the petitioner s registration has been cancelled and thereby he cannot continue his business activities, it is deemed apposite to give an opportunity to the petitioner to challenge the impugned order either by way of filing a petition U/s 30 of the GST Act or to file an appeal within a reasonable time. Petition dismissed.

Summary

Issues:
Cancellation of registration under CGST/APGST Act, 2017 on grounds of alleged fraudulent activities, Violation of principles of natural justice, Maintainability of writ petition due to availability of alternative remedy.

Analysis:
The petitioner, a business entity dealing in iron scrap, challenged the cancellation of its registration under CGST/APGST Act, 2017 on the basis of alleged fraudulent activities by its suppliers. The petitioner contended that the show cause notice issued by the 1st respondent did not provide all relevant reports and particulars, thereby violating principles of natural justice. The petitioner argued that without proper evidence, the cancellation was unjustified and based on incorrect grounds. The petitioner also highlighted that the impugned order was passed without considering crucial aspects, such as the lack of inward receipt of goods leading to the absence of outward sales. The petitioner emphasized the violation of natural justice due to the non-supply of reports by GST authorities, which formed the basis of the show cause notice.

The petitioner's counsel vehemently argued against the cancellation, asserting that the petitioner did not engage in fraudulent activities and was not provided with necessary information to respond effectively. On the other hand, the Government Pleader for Commercial Taxes contended that the writ petition was not maintainable as the petitioner had alternative remedies available under the law, such as filing a petition for revocation of cancellation or appealing against the impugned order. The Government Pleader maintained that the show cause notice contained particulars of non-existent dealers involved in fraudulent transactions, negating the petitioner's claim of lack of information and violation of natural justice.

The Court deliberated on the maintainability of the writ petition in light of the availability of alternative remedies. Citing legal precedent, the Court noted that the writ petition could be maintainable in specific circumstances, including the violation of principles of natural justice. Upon reviewing the show cause notice, the Court found that necessary particulars were provided, refuting the petitioner's argument of information deficiency and natural justice violation. While acknowledging the petitioner's right to challenge the impugned order through alternative remedies, the Court dismissed the writ petition. However, the Court granted the petitioner an opportunity to either file a petition for revocation of cancellation or appeal the order within 15 days, ensuring a fair hearing for both parties.

In conclusion, the Court's judgment dismissed the writ petition but allowed the petitioner the chance to challenge the cancellation of registration through appropriate legal channels within a specified timeframe. The Court emphasized the importance of adhering to principles of natural justice while providing avenues for redressal under the law.