2024 (10) TMI 270 - HC - GST

Violation of principles of natural justice - Validity of SCN - cryptic notice - Whether the show cause notice for cancellation of registration and action of suspending the registration by order dated 27.01.2024 is justifiable and proper or not? - HELD THAT - Since the impugned show-cause notice and suspension of registration is founded upon a cryptic notice dated 27.01.2024, both are set aside. On regular basis, this kind of notices are noticed whereby, without assigning adequate reasons, the business of taxpayer is suddenly suspended. In absence of basic reasons available in the show-cause notice, the party aggrieved by it cannot even prefer an effective representation - the authorities should sensitize themselves and should not pass order/notice in the mechanical manner it is passed in the present case. We hope and trust that, henceforth, the authorities will take care of this aspect. The impugned show-cause notice dated 27.01.2024 and the order suspending the registration are set aside. Liberty is reserved to the respondents to proceed against the petitioner in accordance with law - Petition allowed.

Summary

Issues:
Validity of show cause notice for cancellation of registration and suspension of registration.

Analysis:
The High Court examined the legality of a show cause notice for cancellation of registration and suspension of registration dated 27.01.2024. The primary issue was whether the notice was justifiable and proper. The petitioner argued that the notice lacked necessary details and was a colorable exercise of power, impacting the right to livelihood guaranteed under Article 21 of the Constitution of India. The respondent conceded that the notice was cryptic and deficient in essential details.

The notice cited Section 29(2)(e) of the Central Goods and Service Tax Act, 2017 as the reason for the action, alleging registration obtained by means of fraud, willful misrepresentation, or suppression of facts. However, the Court found the notice to be vague and lacking in specifics regarding the nature of the alleged fraud or misrepresentation. Citing previous judgments, the Court emphasized the importance of providing a factual backdrop in show cause notices to enable a meaningful reply.

Referring to previous cases where proceedings were interfered with due to lack of reasons mentioned in initiating proceedings, the Court held that the foundation of the show cause notice in this case was weak, leading to the set aside of both the notice and the suspension of registration. The Court criticized the trend of issuing inadequate notices, impacting taxpayers' businesses without sufficient reasons, and stressed the need for sensitivity and diligence in such matters.

The Court highlighted the significance of natural justice principles and the adverse impact of hasty actions on taxpayers' livelihoods. It urged authorities to be more considerate and detailed in their orders and notices to avoid unjust consequences. The Court refrained from imposing costs on the respondents based on an assurance from the Assistant Government Pleader to address the Court's observations in future cases.

Ultimately, the Court allowed the writ petition, setting aside the impugned show cause notice and the order suspending registration while reserving liberty for the respondents to proceed lawfully. The judgment underscored the importance of procedural fairness and detailed reasoning in administrative actions affecting individuals' rights and businesses.