2024 (10) TMI 610 - HC - GST

Revovation of voluntary application for cancellation of registration accepted by the Central Goods and Services Tax (CGST) Authority - subsequent cancellation of registration with retrospective effect - HELD THAT - The CGST Authorities accepted the Petitioner's application for registration cancellation with effect from 8th May 2023. Since the orders revocating registration cancellation on the Petitioner s application were passed contrary to the principles of natural justice, all the subsequent proceedings initiated thereafter, which are consequential, also have to be quashed. The Petitioner should have checked his email when the Respondent sent the show cause notice dated 26 February 2024, which the Petitioner has submitted has been inadvertently overlooked. The Petitioner's conduct not approved on this count. The learned counsel for the respondents expressed an apprehension that the petitioner may utilise the ITC to its credit up to 8 May 2023 and try to render the further proceedings infructuous. In the facts of the present case, the Petitioner will have to be restrained from utilising this ITC for some reasonable period during which the respondents would have to conclude their proceedings. This would balance the interests of both the parties. The Orders dated 20 February 2024, 8 March 2024 and 9 May 2024 passed by CGST Authorities are quashed and set aside - The Position as of 8 May 2023 is restored being the date of acceptance of the application of Petitioner for cancellation of registration - Petition disposed off.

Summary

Issues:
Challenge to order revoking voluntary cancellation of registration and subsequent cancellation with retrospective effect.

Analysis:
The petition challenged the revocation of voluntary cancellation of registration and subsequent cancellation with retrospective effect by the Central Goods and Services Tax (CGST) Authority. The petitioner voluntarily applied to cancel the registration, which was accepted, but later revoked without a show cause notice. The court found that the restoration of cancellation without a show cause notice violated principles of natural justice. The rejection of the application for cancellation lacked reasons, indicating a lack of application of mind. The subsequent show cause notice for cancellation did not explain the retrospective effect or provide reasons for the same. The court held that the decision-making process leading to the impugned action was flawed.

The court noted that the registration was granted in June 2021 but was cancelled retrospectively from June 2020, without explanation. The lack of disclosure of documents supporting the rejection of the cancellation application before revocation also violated principles of natural justice. The court quashed the orders passed by the CGST Authorities and restored the position as of the date of acceptance of the cancellation application. The respondents were directed to issue a show cause notice for revocation of registration and conclude proceedings by a specified date. The petitioner was restrained from utilizing any Input Tax Credit (ITC) until the conclusion of proceedings to balance the interests of both parties.

In conclusion, the court set aside the impugned orders due to the flawed decision-making process, granting respondents the liberty to proceed in accordance with the law. The petitioner was given the right to challenge any future orders. The court disposed of the petition without imposing any costs.