2024 (7) TMI 664 - HC - GST

Maintainability of petition - availability of alternative remedy - Cancellation of registration of the petitioner under CGST/APGST Act, 2017 - violation of principles of natural justice - HELD THAT - Hon'ble Apex Court in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai 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 23.06.2023 shows that the 1st respondent has given required particulars of the non-existent tax payers from whom the petitioner allegedly obtained bogus tax invoices. Petition dismissed.

Summary

Issues:
Cancellation of registration under CGST/APGST Act, 2017 based on alleged violations of principles of natural justice and constitutional rights.

Analysis:
The petitioner, a business entity dealing with iron scrap, sought a writ of mandamus challenging the cancellation of its registration under the CGST/APGST Act, 2017 by the 1st respondent. The petitioner contended that the cancellation was illegal, arbitrary, and violated principles of natural justice and constitutional rights. The petitioner had been regularly filing returns and paying taxes as per the GST Act, after availing Input Tax Credit (ITC). The cancellation was proposed based on allegations that the suppliers of goods to the petitioner had availed ITC without actual receipt of goods, which the petitioner disputed. The petitioner argued that without inward receipt of goods, there could not be outward sales, and the allegations were baseless and contrary to the Assessment Order.

In response to the show cause notice, the petitioner filed detailed objections disputing the allegations and requesting the proposed action to be dropped. The petitioner highlighted the lack of incriminating material provided by the 1st respondent and the violation of principles of natural justice. The petitioner also mentioned not being properly advised to file a petition for revocation of registration under the CGST Act, 2017. During the hearing, the petitioner's counsel argued vehemently that the cancellation was based on erroneous grounds and violated natural justice.

The Government Pleader for Commercial Taxes argued that the writ petition was not maintainable as the petitioner had alternative remedies available under the GST Act, such as filing for revocation of cancellation or appealing against the impugned order. The Government Pleader contended that the show cause notice contained particulars of non-existent dealers from whom the petitioner allegedly obtained bogus invoices, refuting the petitioner's claim of non-supply of material and violation of natural justice.

The High Court considered the arguments and cited the Whirlpool Corporation case to address the issue of maintainability of the writ petition when alternative remedies are available. The Court noted that the petitioner relied on the violation of principles of natural justice to maintain the writ petition. Upon reviewing the show cause notice, the Court found that required particulars were provided, and the petitioner had not availed the alternative remedy to challenge the impugned order. Therefore, the Court dismissed the writ petition but allowed the petitioner to challenge the order by filing an application for revocation of cancellation or an appeal within 15 days.

In conclusion, while the writ petition was dismissed, the petitioner was granted an opportunity to challenge the cancellation of registration through alternative remedies within a specified timeframe, ensuring a fair opportunity for both parties to present their case.