2024 (10) TMI 1048 - HC - GST

Cancellation of GST registration of petitioner, obtained by fraud - time limitation - petitioner s application for revocation of cancellation of GST registration was dismissed having been preferred beyond the statutory time limit - no valid resaon in the SCN - Violation of principles of natural justice - HELD THAT - It is pertinent to note that the only reason notified to the petitioner for revoking the registration in the notice served upon him was to the effect that he had obtained registration by practising fraud. It is totally bereft of any circumstance indicating as to the manner in which the alleged fraud was perpetrated. Considering the fact that fraud is a serious allegation which has to be proved to the hilt, respondent no. 4 - Joint Commissioner would have been more cautious in issuing the show cause notice by giving all the details and circumstances which were considered for drawing the inference about alleged fraud. It would have extended an opportunity to the petitioner to deal with each of the circumstances individually and even collectively. The order passed by respondent no. 4 - Joint Commissioner in the original proceeding and that of respondent no. 3 - Commissioner in the appeal are quashed and set aside. The matter is remitted back to respondent no. 4 - Joint Commissioner. Petition disposed off by way of remand.

Summary

Issues:
Challenge to cancellation of GST registration based on fraud allegation, rejection of application for revocation of cancellation, failure to address cause for delay in filing revocation application, lack of consideration of merits for condoning delay, violation of natural justice principles.

Analysis:
The petitioner, a proprietary firm, obtained GST registration but faced cancellation due to alleged fraud. The respondent authorities rejected the application for revocation of cancellation, leading to a writ petition challenging the decision. The High Court referred the matter to the appellate authority, the Commissioner (Appeals). However, the petitioner failed to attend a crucial hearing due to illness, resulting in an ex-parte decision upholding the cancellation. The petitioner argued that there was a valid reason for the delay and that the appellate authority exceeded its jurisdiction by not considering this aspect.

The Joint Commissioner's order rejecting the application for condonation of delay lacked proper consideration of the grounds presented by the petitioner. The High Court noted that the authorities failed to address the cause for the delay and instead focused on the merits of the revocation application. This approach was deemed unsustainable and a violation of procedural fairness. The Court emphasized the importance of assessing whether there was a genuine reason for the delay in filing the revocation application.

Both the Joint Commissioner and the appellate authority erred in their handling of the case by not properly evaluating the petitioner's request for condoning the delay. The Court highlighted the serious nature of fraud allegations in the cancellation of registration and criticized the lack of detailed explanation provided to the petitioner. The orders of the Joint Commissioner and the Commissioner in the appeal were quashed, and the matter was remitted back to the Joint Commissioner for a fresh decision in accordance with law and considering the observations made by the Court.

The Court found the actions of the authorities to be illegal, arbitrary, and violative of natural justice principles. The writ petition was partly allowed, the impugned orders were set aside, and the petitioner was directed to appear before the Joint Commissioner for a reconsideration of the application for revocation of registration cancellation. The Court emphasized the need for a fair and thorough evaluation of the petitioner's case, including the reasons for the delay, to ensure procedural propriety and uphold the principles of natural justice.