2025 (2) TMI 732 - HC - GST

Challenge to SCN and subsequent orders - Cancellation of GST registration of petitioner - petitioner had failed to furnish returns for a continuous period of six months - non-application of mind - violation of principles of natural justice - HELD THAT - SCN requires the petitioner to appear before the undersigned on 16.03.2024 at 11 45 am. The show cause notice does not even bear the name designation office or signature of any individual and is completely blank. Further the reason for rejection of the revocation application is a direction to the petitioner to file the return from April 2023 to date. Clearly the show cause notice for rejection of the application for revocation is also defective and not sustainable. The consequent order to the application for revocation dated 02.04.2024 also does not contain any reason it merely states that reply has not been filed to the notice dated 12.03.2024 and the application is accordingly rejected. There is complete non application of mind. The entire proceedings initiated by the respondent are flawed and the error commenced from the issuance of the the very show cause notice dated 11.10.2023 as noticed hereinabove. Since the very show cause notice i.e. the seed of the proceedings was defected all proceedings emanating there from are thus unsustainable. There is also complete non application of mind and the show cause notices and orders have been passed in a mechanical manner. Cancellation of GST registration has a serious impact on the registrant and its ability to carry on business. Such a cancellation cannot be in a mechanical or casual manner as has been done in the present case. There has to be a complete application of mind and cogent reasons for such a drastic step of cancellation of GST registration. Conclusion - i) Cancellation cannot be in a mechanical or casual manner as has been done in the present case. There has to be a complete application of mind and cogent reasons for such a drastic step of cancellation of GST registration. ii) The SCN and order cancelling the registration of the petitioner; and the order dated 02.04.2024 rejecting the application for revocation for cancellation are set aside. The GST registration of the petitioner is restored. Petition allowed.

Summary

The High Court of Madhya Pradesh considered a case where the petitioner challenged a show cause notice, an order cancelling their GST registration, and the subsequent dismissal of their application for revocation of cancellation. The key issues considered in this judgment are as follows:**Issues Presented and Considered:**1. Whether the show cause notice and subsequent orders were legally valid and sustainable.2. Whether the cancellation of GST registration was done in accordance with the law and principles of natural justice.3. Whether the petitioner's application for revocation of cancellation was properly considered and rejected.**Issue-wise Detailed Analysis:****1. Validity of Show Cause Notice and Cancellation Order:**- The show cause notice was found to be defective due to vague reasons and lack of essential details.- The notice did not specify the period for which returns were not filed, the officer issuing the notice, or the place of appearance.- The cancellation order lacked reasons and was digitally signed by an entity, indicating non-application of mind.- The Court emphasized the importance of clear, reasoned decisions in matters of cancellation of GST registration.**2. Rejection of Application for Revocation:**- The show cause notice for rejection of the revocation application was also found to be defective and lacking essential details.- The subsequent order rejecting the application did not provide reasons and showed a lack of application of mind.- The Court highlighted the need for proper consideration and reasoned decisions in rejecting such applications.**Significant Holdings:**- The Court set aside the show cause notice, cancellation order, and rejection of the revocation application due to procedural and substantive defects.- The petitioner's GST registration was restored, with a directive to comply with necessary obligations under the law.- The judgment emphasized the importance of due process, application of mind, and cogent reasons in administrative decisions affecting individuals and businesses.- The respondents were allowed to take lawful steps for recovery of taxes, penalties, or interest, with proper notice and hearing.In conclusion, the High Court's judgment focused on procedural irregularities, lack of reasoning, and non-application of mind in the issuance of the show cause notice, cancellation of GST registration, and rejection of the revocation application. The restoration of the petitioner's registration underscored the significance of fair administrative procedures and reasoned decision-making in matters impacting individuals and businesses.