2022 (7) TMI 1168 - HC - GST

Cancellation of the petitioner s registration - non-existent report dated 23/07/2020 - HELD THAT - Although counter-affidavit has been filed, the following has not been disputed by the respondents/revenue (i) Firstly, no notice of inspection was served on the petitioner, as is required under Section 25 of the CGST Rules 2017. (ii) Secondly, the inspection report dated 23.07.2020, which forms the basis of the impugned order dated 30.03.2021, was not furnished to the petitioner. (iii) Several other reasons have been mentioned in the counter-affidavit by the respondent/revenue, which find no reflection in the impugned order dated 30.03.2021. The writ petition is thus, disposed of, with the direction that the petitioner s revocation application will be dealt with in the next two weeks.

Summary

Issues:
Challenge against cancellation of registration based on cryptic reasons, non-compliance with procedural requirements, failure to provide inspection report, lack of response basis in show-cause notice, delay in processing revocation application, reliance on DGARM report for existence demonstration.

Analysis:
The writ petition challenged the cancellation of the petitioner's registration, primarily contesting the vague reason provided for the cancellation in the order dated 30.03.2021. The petitioner received a show-cause notice (SCN) dated 04.08.2020 proposing cancellation based on "Suo moto cancellation of registration," which lacked clarity on the underlying basis, making it difficult for the petitioner to respond adequately. Despite this, the petitioner submitted a reply on 14.08.2020, leading to the impugned order based on this response. The petitioner later filed an application for revocation on 13.06.2021 due to inaction, prompting the writ petition.

The court noted several discrepancies in the proceedings, including the absence of a notice of inspection as required by Section 25 of the CGST Rules 2017 and the failure to provide the inspection report dated 23.07.2020, which formed the basis of the cancellation order. The counter-affidavit filed did not dispute key points, such as the lack of notice of inspection and the non-furnishing of the inspection report to the petitioner. Additionally, discrepancies between the reasons mentioned in the counter-affidavit and the grounds in the cancellation order were highlighted.

The petitioner's representative relied on the DGARM report referenced in the writ petition to establish the existence of the firm. The court, inclined to provide an opportunity for correction, directed the concerned officer to address the revocation application within two weeks, granting a personal hearing to the petitioner's authorized representative. The officer was instructed to issue a written communication for the hearing and subsequently pass a speaking order, with the petitioner retaining the right to challenge any adverse determination. The matter was listed for compliance on 17.08.2022, emphasizing the need for adherence to procedural fairness and timely resolution of the revocation application.