2024 (10) TMI 128 - HC - GST

Cancellation of its GST registration with retrospective effect - incomplete SCN - violation of principles of natural justice - HELD THAT - It is material to note that the SCN did not specifically propose cancelling the petitioner s GST registration with retrospective effect. It is also material to note that the SCN mentioned that in the event the petitioner did not appear for a personal hearing at the appointed date and time, the case would be decided ex-parte on the basis of available records and on merits. However, no date of a personal hearing was communicated to the petitioner. As noted, the SCN does not mention any appointed date or time for a personal hearing - the decision of the proper officer to cancel the petitioner s GST registration with retrospective effect falls foul of the principles of natural justice. The petitioner also questions the grounds on which the petitioner s GST registration was cancelled. According to the SCN, the petitioner s registration was proposed to be cancelled as the petitioner s address was not traceable. However, the petitioner has annexed a copy of an electricity bill reflecting the same address. The present petition is disposed off by directing that the impugned cancellation order shall take effect from 15.06.2022. The impugned cancellation order is modified to the said extent.

Summary

Issues:
1. Petitioner's prayer to cancel GST registration with retrospective effect.
2. Rejection of petitioner's application for cancellation.
3. Grounds for cancellation mentioned in the Show Cause Notice (SCN).
4. Appeal against the cancellation order based on limitation period.
5. Violation of principles of natural justice in cancelling GST registration with retrospective effect.
6. Discrepancy in grounds for cancellation and evidence provided by petitioner.

Analysis:
The petitioner filed a petition seeking the cancellation of their GST registration with effect from a specific date. The impugned cancellation order had retroactively canceled the registration from an earlier date, which the petitioner contested. The petitioner applied for cancellation citing financial issues, but the application was rejected due to a mismatch in Input Tax Credit (ITC) in certain forms. Despite a subsequent Show Cause Notice (SCN) mentioning the untraceable address and non-responsive contact number, the petitioner did not respond, leading to the cancellation order with retrospective effect from 2017.

The petitioner appealed this cancellation order, but the appeal was dismissed on the grounds of being beyond the limitation period. The main contention of the petitioner was not the cancellation itself, as they had requested it, but the retrospective effect of the cancellation. The Court noted that the principles of natural justice were violated as the SCN did not specify a date for a personal hearing, leading to the decision being unjust.

Furthermore, the grounds for cancellation based on the untraceable address were contradicted by evidence provided by the petitioner in the form of an electricity bill with the same address. Both parties eventually agreed to modify the cancellation order to make it effective from the date of the SCN, thereby rectifying the retrospective aspect. The Court clarified that this modification did not prevent authorities from taking further action for recovery of dues or statutory non-compliances in accordance with the law.

In conclusion, the Court disposed of the petition by directing the modified effective date of the cancellation order and clarifying the scope of further actions by the authorities. The judgment aimed to rectify the procedural and substantive issues surrounding the cancellation of the petitioner's GST registration, ensuring compliance with principles of natural justice and evidence-backed decision-making.