2024 (8) TMI 1035 - HC - GST

Cancellation of GST registration with retrospective effect - SCN did not specify any intelligible reason for proposing to cancel the petitioner s GST registration - violation of principles of natural justice - HELD THAT - The purpose of a show cause notice is to enable the noticee to respond to the allegations. In the present case, since the SCN did not contain any specific details, it was incapable of eliciting any meaningful response. The SCN was cryptic and fails to meet the standards of a show cause notice. The impugned order is also bereft of any details. It merely mentions that it is in reference to the SCN. It is important to note that the SCN did not propose cancellation of the petitioner s GST registration with retrospective effect. However, the impugned order proceeded to cancel the petitioner s GST registration with retrospective effect from 22.04.2018. Neither the SCN nor the impugned order cancelling the petitioner s GST registration can be sustained. As is apparent from the above, the impugned order has been passed in violation of the principles of natural justice - the SCN and the impugned order set aside - the respondents are directed to restore the petitioner s GST registration forthwith - petition disposed off.

Summary

Issues:
Impugning the cancellation of Goods and Services Tax (GST) registration with retrospective effect, validity of Show Cause Notice (SCN) for cancellation, propriety of the reasons for cancellation, compliance with principles of natural justice.

Analysis:
The petitioner challenged the cancellation of their GST registration with retrospective effect from 22.04.2018 through a petition, contending that the Show Cause Notice (SCN) lacked specific details regarding the alleged fraud, misstatement, or suppression of facts. The petitioner's registration was suspended upon issuance of the SCN, which also directed the petitioner to reply within seven days and appear before the proper officer. Subsequently, the petitioner applied for revocation of the cancellation, but the application was rejected, citing the reason for rejection as the need to upload KYC documents and join an investigation with the Anti Evasion branch. The petitioner argued that the requirement for a 'No Objection Certificate' (NOC) was unsupported by any statutory provision.

The Court noted that the SCN failed to provide intelligible reasons for the proposed cancellation, as it did not specify details of the alleged fraud, misstatement, or suppressed facts. The purpose of a show cause notice is to enable a meaningful response, which was not possible in this case due to the lack of specific details. The impugned order, without proper details, cancelled the registration retrospectively, violating the principles of natural justice. Consequently, both the SCN and the impugned order were set aside, directing the restoration of the petitioner's GST registration immediately.

The Court clarified that while the order restores the registration, it does not prevent the respondents from initiating further proceedings against the petitioner for statutory violations, but such actions must adhere to legal principles. The petition was disposed of accordingly, emphasizing the importance of due process and providing detailed reasons when taking administrative actions such as cancellation of GST registration.