2022 (7) TMI 127 - HC - GST

Validity of SCN - It is the case of the writ applicant that he learnt about issuance of such show cause notice when the same came to be uploaded on common portal - cancellation of registration of premises of petitioner - Violation of principles of natural justice - HELD THAT - The show cause notice is not tenable in eye of law inasmuch as the same is found without any material particulars, which a prudent person would be able to respond. In the facts of the case, upon bare perusal of the contents of the show cause notice, it is found that the reason recorded by the respondent authority is a mere incorporation of the relevant ground appearing in the Rules framed thereunder. The show cause notice should have referred to any material particulars as to in what manner the authority has prima facie found that the registration of the writ applicant has been obtained by means of fraud, will ful misstatement or suppression of facts. As against that upon perusal of the order for cancellation of registration passed by the respondent Authority, it refers to the initiation of proceedings under Section 67(2) of the GGST Act, 2017 in respect of M/s. Sridev Traders, Rajkot. It further emerges that the respondent Authority while passing the said order of cancellation of registration had referred to and relied upon the letter dated 14.12.2021 addressed by the State Tax Officer(1), Enforcement, Division-9, Bhavnagar with regard to the investigation proceedings. Thus, the respondent Authority has proceeded to pass the order for cancellation of registration on new material or facts which were neither formed part of the show cause notice nor the same were disclosed to the writ applicant. The respondent authority has failed to adhere to the basic principles of natural justice and such action of the respondent authority is illegal and is required to be interfered with. The matter remanded back to the respondent Authority for denovo proceedings.

Summary

Issues:
Validity of show cause notice and consequential order of registration cancellation.

Analysis:
1. The writ applicant, engaged in trading of Areca Nuts, applied for GST registration in September 2021 and was issued a unique registration number. Subsequently, a situation arose where a conveyance carrying goods was intercepted, leading to the detention of goods without prior notice to the applicant.

2. Despite the applicant's cooperation during the inquiry process, the respondent authority issued a show cause notice on 14.12.2021, calling for the registration's cancellation, which came as a surprise to the applicant. The notice lacked specific details and the reasons provided were vague, leading to a challenge in the High Court.

3. The Court analyzed the legality of the show cause notice and the subsequent order of registration cancellation. It was observed that the notice was deficient in material particulars necessary for a proper response. The Court noted a breach of natural justice principles as the order of cancellation relied on new material not disclosed to the applicant, depriving them of a fair opportunity to respond.

4. Citing a previous case, the Court emphasized the importance of proper issuance of show cause notices and adherence to principles of natural justice in such matters. The respondent authority's actions were deemed illegal due to the lack of adherence to basic principles of natural justice.

5. Consequently, the Court quashed the show cause notice dated 14.12.2021 and the order of registration cancellation dated 30.12.2021. The matter was remitted back to the respondent Authority for fresh proceedings, directing them to follow the principles of natural justice. The Court further ordered the restoration of the applicant's GST registration.

6. In conclusion, the Court disposed of the matter by setting aside the impugned notices and ordering a fresh consideration of the case by the respondent Authority in line with the principles of natural justice and previous directives issued by the Court in similar matters.