2024 (8) TMI 1314 - HC - GST

Cancellation of GST registration of petitioner - SCN does not contain any reason or ground as to why the registration of the petitioner is sought to be cancelled - order of cancellation also does not contain any reason as to why the registration of the petitioner is being cancelled - Time to reply to SCN not given - violation of principles of natural justice - HELD THAT - A perusal of the show-cause notice and the order of termination of cancellation of registration placed do not show any reasons either in the show-cause notice or in the order of cancellation. The contention of the respondents that there are certain restrictions on what can be placed in these documents cannot in any manner protect such orders when there is a violation of principles of natural justice. It is, at best, a case of self-inflicted injury. The fact that the specific allegation in regard to the signatures that are said to be appended by Sri B. Obulesh and Sri Munendra, has not been denied by the respondents is sufficient to hold that the said allegation is correct. Even otherwise, it is a very roundabout way of denying allegations by stating that the said allegations could have been placed before the 1st respondent. In these circumstances, this Court finds that the entire process of issuing show-cause notice and issuing the order for cancellation of registration without assigning any reason, is a clear case of violation of principles of natural justice. Petition disposed off.

Summary

Issues:
1. Cancellation of registration under the Central Goods and Services Tax Act, 2017 without providing reasons.
2. Violation of principles of natural justice in the cancellation process.
3. Allegations regarding the show-cause notice and mahazar.
4. Respondent's contention of limitations in mentioning reasons in documents.
5. Denial of specific allegations by the respondents.
6. Restoration of registration and further actions under the GST Act.

Analysis:
The petitioner was registered under the Central Goods and Services Tax Act, 2017, and received a show-cause notice for registration cancellation. The petitioner sought time to respond but the respondent issued an order for cancellation without specifying reasons, leading to the petitioner approaching the High Court through a Writ Petition. The petitioner argued that the lack of reasons in the notice and order violated principles of natural justice, emphasizing discrepancies in the mahazar and the involvement of unauthorized individuals in the inspection process.

The respondent contended that limitations in the online system prevented detailed reasons from being mentioned in the notice or order, stating that the petitioner had access to view the reasons online. However, the Court found that the absence of reasons in both documents was a clear violation of natural justice, regardless of system limitations. The Court highlighted the importance of providing reasons in such orders to ensure transparency and fairness in administrative decisions.

The Court noted that the specific allegations regarding unauthorized individuals involved in the inspection were not denied by the respondents, indicating a lack of proper verification and procedural irregularities. The Court held that the cancellation process lacked transparency and fairness, ultimately setting aside the order for cancellation and restoring the petitioner's registration under the GST Act.

The judgment concluded by directing the restoration of the petitioner's registration, allowing further actions under the GST Act if necessary, and closing any pending miscellaneous petitions. No costs were awarded in the matter, emphasizing the importance of upholding principles of natural justice and procedural fairness in administrative actions under the GST Act.