2024 (9) TMI 302 - HC - GST

Violation of principles of natural justice - SCN did not provide any specific reason as to the alleged fraud, wilful misstatement and it did not provide any clue as to the facts which were allegedly suppressed by the petitioner - Cancellation of registration of petitioner - HELD THAT - The show cause notice that was issued to the petitioner therein on 16.05.2023 had alleged that the petitioner's GST registration was proposed to be cancelled on account of fraud, willful misstatement or suppression of facts; however, it did not provide any specific reason as to the alleged fraud, wilful misstatement and it did not provide any clue as to the facts which were allegedly suppressed by the petitioner - Since specific ground for such proposed action was not provided and no further information was given to the petitioner, the order of cancellation of the petitioner's GST registration was set aside. This Court is of the opinion that interest of the petitioner can be sufficiently protected if a direction is issued to opposite party no.3 to provide all documents to the petitioner which have been referred to in the show cause notice, on the basis of which the show cause notice dated 22.03.2024 was issued to the petitioner, within ten days from today. Petition disposed off.

Summary

Issues:
Challenge to show cause notice for cancellation of registration and suspension order under Central Goods and Service Tax Act, 2017.

Analysis:
The writ petition challenged the show cause notice for cancellation of registration and suspension order dated 22.03.2024 under the Central Goods and Service Tax Act, 2017. The petitioner contended that the notice lacked reasons and failed to specify the alleged fraud or misconduct. The court noted the absence of prima facie reasons and material in the notice and questioned the compliance with statutory requirements. The petitioner's additional reply highlighted the lack of specific details in the show cause notice, hindering a proper response.

The respondent's objections to the maintainability of the petition were considered, with the court emphasizing the need for statutory compliance in issuing show cause notices. The court directed the respondent to provide all referenced documents to the petitioner within a specified timeframe to enable a proper response. The court highlighted the importance of a reasoned and speaking order based on the petitioner's reply within a stipulated period, ensuring procedural fairness and adherence to legal requirements.

The respondent presented evidence from a raid at the petitioner's business premises, alleging fraudulent activities and misuse of registration for generating fake ITCs. The court probed the legal provisions for action against registered traders engaging in fraudulent operations post-registration, seeking clarity on the statutory framework for such cases. The respondent's contention that suspension orders can accompany show cause notices was noted, emphasizing the need for the petitioner to respond adequately before a final decision is made.

The petitioner's counsel argued that the petitioner had sought documents mentioned in the show cause notice to prepare a comprehensive reply, highlighting discrepancies in the allegations and lack of material evidence against the petitioner. Reference was made to a Delhi High Court judgment setting aside a registration cancellation due to insufficient grounds provided in the show cause notice. The court, considering the arguments from both sides, directed the respondent to furnish all necessary documents to the petitioner promptly to facilitate a fair and informed response, followed by a reasoned decision within a specified timeframe.

In conclusion, the court disposed of the writ petition, emphasizing the importance of providing the petitioner with all referenced documents for a thorough response and ensuring a timely and reasoned decision based on the petitioner's submissions. The judgment underscored procedural fairness, statutory compliance, and the need for a comprehensive and transparent decision-making process in matters of registration cancellation and suspension under the Central Goods and Service Tax Act, 2017.