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2024 (8) TMI 574 - HC - GSTCancellation of GST registration ab initio with retrospective effect from 01.07.2017 - SCN does not specify any reason for cancelling the petitioner s GST registration with retrospective effect - violation of princples of natural justice - HELD THAT - The SCN does not mention any specific provision of the GST Act or the Rules, which were allegedly violated by the petitioner. More importantly, the SCN does not propose the cancellation of the petitioner s GST registration with retrospective effect. Although, the petitioner was not aware of the SCN, however, even if it is accepted that the petitioner had duly received the same, no action could be taken pursuant to the said SCN. This is because the SCN is bereft of any reasons and fails to meet the standards as are required of a show cause notice - any show cause notice must clearly set out the reasons for the proposed adverse action in order to enable the noticee to furnish a meaningful response. As is apparent from the plain reading of the SCN, the same fails to meet this standard. The order dated 16.06.2020, cancelling the GST registration of the petitioner is also bereft of any reasons. It merely mentions that it is pursuant to the SCN. It also mentions that it is in reference to the reply dated 07.06.2020. However, concededly, no such reply was submitted by the petitioner. The order cancelling the petitioner s GST registration is based on a template that automatically picks up a reference to a reply even in the cases where none has been furnished. It is considered apposite to direct the order dated 16.06.2020 cancelling the GST registration of the petitioner will take effect from the date of the SCN, that is, 29.05.2020 and not ab initio - petition disposed off.
Issues:
Impugning order cancelling GST registration ab initio with retrospective effect from 01.07.2017, Failure to specify reasons for retrospective cancellation, Lack of compliance with show cause notice standards, Lack of reasons in cancellation order, Request for cancellation to be effective from SCN date, Authority to initiate proceedings for non-compliance or dues recovery. Analysis: The petitioner challenged the order cancelling their GST registration ab initio with retrospective effect from 01.07.2017. The petitioner applied for cancellation due to business discontinuation after filing returns for 2017-18 and 2018-19. The Proper Officer issued a Show Cause Notice on 29.05.2020 citing non-compliance, but the petitioner claimed unawareness due to pandemic disruptions. The subsequent order on 16.06.2020 cancelled the registration retrospectively, leading to an appeal rejected on 07.11.2023. The petitioner's grievance was against retrospective cancellation, not the cancellation itself. The Court noted the lack of specificity in the Show Cause Notice regarding the reasons for retrospective cancellation. The Notice cited non-compliance without specifying the provisions violated or proposing retrospective cancellation. The Court emphasized that a valid Show Cause Notice must clearly outline reasons for adverse action to allow a meaningful response. The subsequent cancellation order also lacked reasons, referencing a non-existent reply from the petitioner. The order was based on a template, automatically mentioning a reply even if none was submitted. Considering the procedural flaws, the Court directed the cancellation order to be effective from the Show Cause Notice date, 29.05.2020, rather than ab initio. This decision aimed to rectify the retrospective aspect of the cancellation. The Court clarified that this ruling did not prevent authorities from pursuing proceedings for statutory non-compliance or dues recovery as per the law. The petition was disposed of accordingly, along with any pending applications. In conclusion, the judgment addressed the procedural deficiencies in the cancellation of GST registration, emphasizing the importance of specific reasons in show cause notices and orders. By altering the effective date of cancellation, the Court aimed to rectify the retrospective nature of the decision while allowing authorities to pursue necessary actions for non-compliance or dues recovery.
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