2024 (8) TMI 895 - HC - GST

Cancellation of petitioner s Goods and Services Tax (GST) registration - the SCN did not set out any specific details of the allegation against the petitioner - violation of principles of natural justice - HELD THAT - The petitioner in his application dated 27.04.2022 seeking revocation of the order of cancellation which was subsequently allowed by an order dated 13.05.2022 had clearly stated that no business activities were being carried out by him on account of him suffering with COVID-19. He had further stated that he was gradually stable and will continue and carry on further business activities . It is also stated that the petitioner has thereafter filed NIL returns on account of lack of business activity. Undisputedly, the petitioner has a fundamental right to carry on legitimate business and the same cannot be interdicted by cancellation of his GST registration. The petitioner had provided property tax receipts and had also explained that he was the owner of his principal place of business. None of these facts were disputed. It is material to note that the said facts form the contents of the petitioner s application dated 27.04.2022 for seeking revocation of cancellation of his GST registration which was allowed. The impugned cancellation order was passed by the Proper Officer based on the directions issued by another authority which is impermissible. The Proper Officer was required to satisfy himself as to the reasons for cancelling the petitioner s GST registration - The impugned SCN; the impugned cancellation order and the impugned appellate order are set aside. The respondents are directed to forthwith restore the petitioner s GST registration. Petition allowed.

Summary

Issues:
Impugning Show Cause Notice, Cancellation Order, and Appellate Order regarding GST registration restoration.

Analysis:
The petitioner, engaged in the business of dealing in metals, had their GST registration cancelled due to alleged non-existence of the business during physical verification. The initial Show Cause Notice (SCN) lacked specific details of the allegation, hindering a meaningful response. The cancellation order was based on the petitioner's non-appearance and lack of response to the SCN, with retrospective effect from a day before the SCN issuance.

The petitioner, claiming ownership of the business premises and providing supporting documents, applied for restoration of GST registration, which was allowed. However, a subsequent SCN proposed cancellation again, citing non-existence during physical verification. The petitioner responded, reiterating business operations from the stated premises.

The cancellation order was passed based on directions from another officer, without providing the related letter to the petitioner for a response, violating natural justice principles. The Appellate Authority rejected the petitioner's appeal for lack of documentary evidence supporting the business's existence during verification.

The court found merit in the petitioner's contentions, emphasizing the fundamental right to carry on legitimate business. The cancellation based on non-existence due to temporary suspension of activities was deemed unjustified. The court set aside the impugned orders, directing restoration of the petitioner's GST registration.

Although the petitioner could have appealed under the CGST Act, the absence of a constituted Appellate Board led the court to entertain the petition. The order allows for future actions if any legal contraventions are found, ensuring due process and the petitioner's right to contest any proposed cancellation in accordance with the law.