2022 (6) TMI 422 - HC - GST

Cancellation of registration of petitioner - Jurisdiction - power to suspend registration during the pendency of proceedings for cancellation of registration - Applicability of Sub-Section 1 of Section 29 of the Act of 2017 or not - HELD THAT - If a drastic power of suspension of registration even during pendency of the proceedings has been conferred on the authority under the Statute, the proceedings itself are required to be brought to its logical conclusion one way or the other in a time bound manner and merely because the Statute does not provide any limitation for completion of proceedings, the authority cannot be allowed to sit over the matter and leave the person to suffer suspension of registration and all consequences to follow where the entire operations are brought to suspension. The authority was required to decide the matter one way or the other within a reasonable time. The respondent No.3 are directed to conclude the proceedings within an outer limit of 15 days from the date of receipt of the copy of this order - petition disposed off.

Summary

Issues:
Challenge to show cause notice for cancellation of registration under Section 29 of the Central Goods and Services Tax Act, 2017.
Validity of power to suspend registration during pendency of proceedings.
Delay in decision-making by the authority.

Analysis:
The petitioner challenged the legality and validity of a show cause notice for cancellation of registration issued on 06.04.2022. The petitioner's counsel argued that the power to suspend registration during proceedings for cancellation, as per Section 29 of the Act of 2017, is drastic and should be decided promptly to avoid adverse effects on the business. The authority had suspended the registration during the proceedings, and the petitioner had replied to the show cause notice with substantial grounds, questioning the applicability of the proviso under Section 29(1) in the present case.

The High Court noted that the power to suspend registration is drastic as it halts business operations, emphasizing the need for a timely decision by the authority. Despite the petitioner filing a reply in April 2022, no decision had been made by the authority. The court highlighted that if such a drastic power is granted, proceedings must be concluded promptly, even if there is no specific timeline in the statute. The court stressed that leaving the registration suspended indefinitely would cause significant consequences to the business.

Based on the arguments and material before them, the court directed the authority to conclude the proceedings within 15 days from the receipt of the order. The authority was instructed to consider the petitioner's reply, especially regarding the applicability of the proviso to Section 29(1) in the current circumstances. If the decision was not made within the specified time frame, the automatic end of the suspension of registration was mandated. The court also granted the petitioner the right to challenge any adverse order in the future.

In conclusion, the petition challenging the show cause notice for cancellation of registration was disposed of by the High Court, emphasizing the importance of timely decision-making by the authority in cases involving the suspension of registration during proceedings for cancellation.