2020 (12) TMI 828 - HC - GST

Cancellation of GST registration - Rule 22(1) of the Central Goods and Services Tax Rules, 2017 - HELD THAT - As the writ-applicant was not in receipt of any attachment along with the show-cause notice, vide letter dated 5th February 2020, he requested the authority to supply the attachment sheet to the show-cause notice dated 4th February 2020 - It appears that despite the specific request for furnishing the attached sheet, the request was not paid heed to, and ultimately, the writ-applicant had to file his reply dated 13th February 2020 to the show-cause notice dated 4th February 2020. Mr.Pandya, the learned counsel appearing for the writ-applicant has raised manifold contentions questioning the legality and validity of the very action on the part of the respondents in initiating the proceedings and also the final order passed cancelling the registration. We are inclined to quash the impugned order dated 25th February 2020 passed by the Commercial Tax Officer on the short ground that the same is a non-speaking order passed without any application of mind. It is very sad to note the manner in which the show-cause notices came to be issued - The show-cause notices, are absolutely bereft of any material particulars or information, and it is but obvious that in the absence of the same, how does the authority expect the writ-applicant to respond to the same in an effective and meaningful manner. The impugned order passed by the respondent no.3 dated 25th February 2020 (Annexure-A to this petition) is hereby quashed and set-aside - Application allowed - decided in favor of appellant.

Summary

Issues:
1. Cancellation of GST registration by respondent no.3.
2. Legality and validity of the actions taken by the respondents.
3. Failure to decide on the application for revocation of cancellation under Section 30 of the GST Act.

Analysis:

1. Cancellation of GST Registration:
The writ-applicant, a proprietor registered with the GST authority, faced cancellation proceedings initiated by respondent no.2 and respondent no.3. The respondent no.2 issued a show-cause notice on grounds of non-compliance, which was responded to by the applicant, resulting in the proceedings being dropped. Subsequently, respondent no.3 issued fresh show-cause notices, with the final one alleging offenses under specific sections. Despite replies from the applicant, the registration was cancelled by the Commercial Tax Officer on 25th February 2020, citing lack of response to the show-cause notice.

2. Legality and Validity of Actions:
The High Court scrutinized the actions of the respondents and found the order of cancellation to be non-speaking and devoid of reasoning. The Court highlighted the lack of material particulars in the show-cause notices, questioning the effectiveness of the applicant's response without adequate information. The Court expressed concern over the successive show-cause notices issued by respondent no.3, especially after dropping proceedings once, indicating a lack of procedural fairness and due consideration. The Court emphasized that the impugned order lacked application of mind and was set aside for being arbitrary and unjust.

3. Failure to Decide on Application for Revocation:
Additionally, the Court noted the delay in deciding on the application for revocation of the registration cancellation under Section 30 of the GST Act, highlighting administrative inefficiencies and undue delays in the process. The Court expressed dissatisfaction with the failure to address the applicant's statutory application seeking revocation, further underscoring the procedural irregularities and lack of timely resolution in the matter.

In conclusion, the High Court allowed the writ-application, quashing the impugned order of cancellation dated 25th February 2020, emphasizing the need for procedural fairness, proper application of mind, and adherence to legal requirements in such proceedings.