2024 (8) TMI 1032 - HC - GST

Restoration of petitioner s cancelled Goods and Services Tax (GST) registration - impugned cancellation order does not indicate that the reply of the petitioner was considered - violation of principles of natural justice - HELD THAT - The impugned cancellation order is not an informed decision in as much as it does not set out any reason for cancellation of the petitioner s GST registration. The impugned cancellation order does not indicate that the reply of the petitioner was considered. Further, the inspection report of the inspector, Panchnama and the photograph of the premises in question on which the decision to cancel the petitioner s GST registration is claimed to be premised were not supplied to the petitioner. The impugned cancellation order has been passed in violation of the principles of natural justice as the petitioner was never called upon to explain such documents. The impugned cancellation order and SCN are liable to be set aside. In the event, the respondent seeks to cancel the petitioner s GST registration, this order will not preclude it from issuing a fresh show cause notice by setting out all the grounds on which such adverse action is proposed and an order is passed in accordance with law. Petition disposed off.

Summary

Issues:
Petitioner seeks restoration of GST registration and challenges cancellation order citing lack of reasons and violation of natural justice.

Analysis:
The petitioner filed a petition seeking restoration of Goods and Services Tax (GST) registration and challenging the cancellation order dated 16.10.2023. The petitioner was registered with GSTIN 07FYEPR3772P1ZI since 24.09.2022. The Proper Officer issued a show cause notice (SCN) on 26.09.2023, proposing cancellation under Section 29(2)(e) for alleged fraud or misstatement. The SCN also mentioned the petitioner was labeled 'non-existent' by the Principal Commissioner of GST and Central Excise, Delhi North. The petitioner's GST registration was suspended from 26.09.2023, the SCN issuance date.

The petitioner responded to the SCN on 06.10.2023, providing supporting documents like rent agreement, Pan Card, Adhaar Card, and electricity bill. However, the Proper Officer disregarded the response and issued the cancellation order retrospectively from 25.09.2022 without addressing the petitioner's reply. The order lacked reasons for rejection and failed to provide documents from the Principal Commissioner's office used as grounds for cancellation.

The respondent's counsel submitted additional documents like an inspector's report, Panchnama, and a photograph of the petitioner's premises, which were not initially shared with the petitioner. These documents formed the basis for cancellation but were not provided for the petitioner's response, violating principles of natural justice. The cancellation order did not justify the retrospective cancellation or consider the petitioner's submissions, further highlighting procedural irregularities.

The Court held the cancellation order and SCN to be set aside due to lack of reasons, violation of natural justice, and retrospective cancellation without proper notice. The respondent was not precluded from issuing a fresh show cause notice with detailed grounds and passing an order lawfully. The judgment reserved all rights and contentions of the parties, disposing of the petition and pending application accordingly.