2022 (9) TMI 120 - HC - GST

Cancellation of registration granted to the appellant - no final order of adjudication passed by the competent authority quantifying the tax liability payable by the appellant - HELD THAT - The suspension of a license of a dealer will be counterproductive and would work against the interest the revenue. We say so because if the registration of a dealer is cancelled, the dealer cannot carry on its business in the sense that no invoice can be raised by the dealer. This would ultimately impact the recovery of taxes. Therefore, the respondent department has to take a pragmatic view in the matter because a taxpayer is not to be treated as a person hostile to the department. Undoubtedly if the taxpayer has adopted dubious process to evade payment tax then he has to be dealt with firmly. From the list of dates and events, it is found that summons were repeatedly issued to the appellant and the appellant has been responding to the summons by submitting representations to the department. Furthermore, it is not clear as to why the authorities did not proceed further pursuant to the summons - the suspension of the appellant s registration should be revoked forthwith with a direction to the appropriate authority to issue show cause notice within a time frame and take up the adjudication proceeding. The writ petition stand disposed of by directing the respondent authority to forthwith revoke the suspension of the appellant s license and with a further direction to the respondent authority to issue show cause notice within seven days from the date of receipt of the server copy of this order.

Summary

Issues:
Challenge to show cause notice for cancellation of registration due to non-quantification of tax liability, Suspension of registration impacting business operations, Pragmatic approach needed by revenue department, Revocation of suspension and issuance of show cause notice directed.

Analysis:
The judgment pertains to an intra-court appeal against an order regarding a writ petition challenging a show cause notice for cancellation of registration. The primary contention was the absence of a final order quantifying the tax liability, rendering the cancellation notice premature. Despite repeated summons and responses by the appellant, no show cause notice had been issued, leading to uncertainty regarding the liability. The court emphasized the necessity of following due process, including issuing a show cause notice and conducting adjudication to determine liability. The suspension of registration was deemed counterproductive as it hindered business operations and tax recovery, urging a pragmatic approach by the revenue department.

The court highlighted the importance of maintaining a balance between tax enforcement and facilitating legitimate business activities. It noted that cancelling a dealer's registration could impede tax collection efforts and stressed the need for the revenue department to act judiciously. The judgment directed the immediate revocation of the appellant's registration suspension and instructed the authorities to issue a show cause notice promptly. The court refrained from delving into the merits of the case, leaving it to the adjudicating authority to consider all contentions raised. No costs were awarded in the matter.

In conclusion, the judgment underscores the significance of procedural fairness in tax matters, emphasizing the need for authorities to adhere to established processes and timelines. By directing the revocation of the registration suspension and the issuance of a show cause notice, the court sought to ensure a transparent and lawful resolution of the dispute, while also highlighting the importance of maintaining a conducive environment for tax compliance and revenue generation.