2024 (6) TMI 1078 - HC - GST

Cancellation of GST registration of the petitioner Company - cancellation on the ground that person issues invoices or bill without supply of goods or services or both in violation of the provisions of the Act, or the rules made thereunder - cancellation also on the ground that person does not conduct any business from declared place of business - HELD THAT - The Appellate Authority has rejected the petitioner's appeal on the ground that the petitioner has not filed any memo of appeal and the grounds on which he is seeking restoration of registration are not clear. The Appellate Authority ought to have adopted the same yardstick while judging the validity of the impugned cancellation order passed by Assistant Commissioner, which also does not disclose any reason for cancellation of petitioner's registration. The mere mention of two sub-rules, without clarifying as to how those rules are being violated and what is the material to substantiate the allegation of violation of rules, would not give rise to a justified ground for cancellation of the petitioner's registration. This Court is of the considered view that the impugned orders dated 18.03.2024 and 03.05.2024 are unsustainable in law. Petition allowed.

Summary

Issues:
Challenge to the validity of the order cancelling GST registration.

Analysis:
The petitioner challenged the validity of an order cancelling their GST registration. The Assistant Commissioner issued a show cause notice alleging violations of Rule 21 (b) and 21 (a) of the Act. The petitioner responded, asserting genuine engagement in the business of sale and purchase of scrap material. The registration was cancelled citing non-conduct of business from the declared place. The cancellation was effective from 01.02.2024, done with retrospective effect. The petitioner appealed, but it was dismissed due to the absence of a memo of appeal, making it difficult to ascertain the grounds for restoration. The Appellate Authority rejected photographs submitted by the petitioner, claiming they were managed post-cancellation.

Legal Analysis:
The Court noted that the show cause notice and cancellation order lacked proper justification. The notice was cryptic, merely alleging violations without mentioning inspection findings or considering the petitioner's explanation. The cancellation order did not address the petitioner's response to the notice. The Court emphasized that any order with adverse consequences must be supported by valid reasons. The Appellate Authority's dismissal for lack of clear grounds mirrored the deficiencies in the cancellation order. Merely citing rule violations without substantiation does not justify cancellation. Consequently, the Court deemed the orders of 18.03.2024 and 03.05.2024 legally unsustainable.

Conclusion:
The High Court allowed the writ petition, quashing the orders of the Assistant Commissioner and Additional Commissioner. The Assistant Commissioner was directed to issue a fresh notice, provide a proper hearing to the petitioner, and make decisions in accordance with the law, considering the petitioner's pleas and evidence.