2021 (4) TMI 1203 - HC - GST

Cancellation of petitioner's registration - no reasons cited for such cancellation - principles of natural justice - HELD THAT - Whatever be the tax demand of the department against the petitioner, the action under challenge cannot survive the test of law. The impugned notice has been issued only for cancellation of registration, that too without citing any particular reason. The reason stated is picked up from the statute itself namely, non-compliance of any specified provisions of GST Act or the Rules made thereunder. Without specifying which provisions of the Act or the Rules and in what manner the petitioner has approached, granting hearing to the petitioner would be an empty formality. This apart, admittedly, so far no order cancelling the petitioner s GST registration has been passed. If that be so, without resorting to the power of suspending the registration, if there is any, the respondent surely cannot block the petitioner s GST account on the official portal. Any such action would prevent the petitioner from carrying on his business in lawful manner. Such an action would have the effect of suspension of the petitioner s registration. SCN is quashed on the ground of being vague and imprecise - the respondents are directed to unblock the petitioner s GST account on its official portal - Petition disposed off.

Summary

Issues: Challenge to cancellation of GST registration and blocking of GST account without specific reasons.

The petitioner, a proprietor engaged in the purchase and sale of taxable goods, challenged a communication dated 16th December 2020 from the Superintendent of Taxes, seeking reasons why the petitioner's GST registration should not be cancelled. The petitioner also questioned the blocking of their GST registration on the department's portal. The show cause notice issued cited non-compliance with GST Act provisions as the reason for potential cancellation. The petitioner failed to reply within the stipulated time but responded later. Despite this, no order was passed on the show cause notice, and the petitioner's GST account remained blocked. The government argued that the petitioner had outstanding dues. The court found the notice vague and imprecise as it did not specify the exact provisions allegedly violated. Without a formal cancellation order, blocking the GST account was deemed unlawful, hindering the petitioner's business operations. Consequently, the court quashed the show cause notice and directed the unblocking of the petitioner's GST account, allowing for lawful business operations while permitting the department to pursue recovery of dues through legal means. The petition was disposed of, along with any pending applications.