2024 (10) TMI 1011 - HC - GST

Cancellation of registration of petitioner u/s 29(2)(a) of the UP GST Act - whether registration has been obtained by willful misstatement and suppression of fact? - HELD THAT - Once on the basis of some material is to be used against the dealer, then it should be put to notice before using the same. But in the case in hand, the petitioner was never put to notice for material use adversely against it, which is in violation of the principle of natural justice and the authorities have not adhered to the same. Further, for cancellation of registration, section 29(2) (a) to (e) is provided, but on perusal of the said section, neither there is any violation of the said section, nor any finding has been recorded by any of the authorities for cancelling the registration of the petitioner as contemplated in section 29(2) of the UP GST Act. The registration of the petitioner could only be cancelled in accordance with the provisions as contemplated in section 29(2) of the UPGST Act and not otherwise. Therefore, the impugned order dated 07.08.2019 passed by the Additional Commissioner, Grade - 2 (Appeal), V, Commercial Tax, Ghaziabad as well as the order dated 30.06.2018 passed by the respondent no. 3 under section 29(2)(a) of the UP GST Act are hereby quashed. Petition allowed.

Summary

Issues:
Challenge to cancellation of registration under UP GST Act based on willful misstatement and suppression of fact.

Analysis:
The petitioner filed a writ petition challenging the cancellation of registration under the UP GST Act. The petitioner's counsel argued that the registration cancellation was unjustified as none of the conditions under section 29(2)(a) of the Act were violated. The counsel contended that the show cause notice was limited in scope, but new grounds were introduced during the cancellation process without giving the petitioner a chance to respond. The petitioner's appeal was also rejected without proper notice or opportunity to rebut the new grounds. The counsel emphasized that registration can only be canceled as per the provisions of section 29(2) of the Act. The Standing Counsel, on the other hand, supported the cancellation, alleging willful misstatement and suppression of facts by the petitioner.

The Court examined the record and noted that the cancellation proceedings were initiated based on a survey at the petitioner's business premises, where no business activity was observed, and no account books were produced. The petitioner's response to this ground was not accepted, leading to the cancellation of registration. However, the Court found that the authorities failed to establish any violation of section 29(2)(e) of the Act regarding willful misstatement or suppression of facts by the petitioner. The Court referenced a previous judgment to highlight that registration can only be canceled if one of the statutory conditions is met, and the exact reason for cancellation must be specified to the petitioner.

The Court emphasized that the authority must specify the reason for canceling registration and provide supporting material in the notice. In this case, the notice lacked specificity and deprived the petitioner of the opportunity to rebut the charge of being "bogus." The Court concluded that the registration could only be canceled in accordance with the provisions of section 29(2) of the Act. Consequently, the orders canceling the registration were quashed, and the writ petition was allowed. The Court imposed a cost on the respondent for dragging the petitioner into litigation and directed payment to the petitioner within a specified timeframe. The respondent was also instructed to file a compliance report regarding the cost payment within two months.