2022 (9) TMI 259 - HC - GST

Cancellation of registration of the petitioner - Rule 25 of the Central Goods and Service Tax Rules, 2017 - HELD THAT - A perusal of the record clearly demonstrates that neither was the letter dated 06.04.2022 furnished to the petitioner, nor was the petitioner given any notice of inspection. A careful perusal of the rule shows that, if after the grant of registration, the proper officer is satisfied that physical verification of the place of business of the concerned person is required, the proper officer may get such verification of the business place carried out, albeit, in the presence of the said person, and thereafter, have the verification report along with other documents including photographs uploaded in Form GST REG-30 on the common portal within 15 working days following the date of such verification. In the instant case, what is not in dispute is that physical verification was carried out by the respondents/revenue, albeit, without having the petitioner s authorized representative remain present; although, concededly, insofar as the second part of the rule is concerned, which required uploading of the verification report and other documents including photographs, it was informed that the same was done. What thus emerges is that the letter dated 06.04.2022 has not been furnished to the petitioner, which, forms the basis of the show cause notice and the impugned order - Besides this, the proper officer opted to have the petitioner s business premises inspected, albeit, without the presence of its authorized representative. As noted, had notice/intimation been given, the glitch could have been overcome. The petitioner will file an application for revocation of order of cancellation within the next 15 days - Petition disposed off.

Summary

Issues:
Cancellation of registration based on show cause notice; Lack of furnishing notice and inspection to the petitioner; Compliance with principles of natural justice; Interpretation of Rule 25 of the Central Goods and Service Tax Rules, 2017; Dispute regarding business activity at the premises; Requirement of notice/intimation for inspection; Adjudication of tax or cess due from the petitioner.

Cancellation of Registration Based on Show Cause Notice:
The writ petition challenged the order cancelling the petitioner's registration issued by the Sales Tax Officer. The cancellation was founded on a show cause notice referring to a letter received from the Deputy Commissioner, alleging the firm's non-existence. The petitioner contended that the impugned order could not be sustained as the letter forming the basis of the notice was not furnished to them, and no notice of inspection was served.

Lack of Furnishing Notice and Inspection:
The petitioner argued that the principles of natural justice were not adhered to as the letter and inspection were not provided. The Court noted that the letter was not furnished to the petitioner, and no notice of inspection was given, as required by Rule 25 of the 2017 Rules for physical verification of business premises.

Compliance with Principles of Natural Justice:
The Court observed that the inspection was conducted without the petitioner's authorized representative present, affecting the authenticity of the report. The petitioner contended that the inspection could have been explained if their representative was present, emphasizing the importance of notice/intimation for such inspections.

Interpretation of Rule 25 of the Central Goods and Service Tax Rules, 2017:
The Court analyzed Rule 25, highlighting the requirement for physical verification in the presence of the person concerned. While the verification report was uploaded, the absence of the authorized representative during inspection raised procedural concerns.

Dispute Regarding Business Activity at the Premises:
Photographs presented by the respondents showed an apparently empty business premises, contested by the petitioner who claimed constant movement of scrap material. The petitioner argued that the photographs alone did not disprove business activity, emphasizing the need for a representative during inspection.

Requirement of Notice/Intimation for Inspection:
The Court acknowledged that the inspection lacked prior notice, impacting the credibility of the findings. Had the petitioner's representative been present, the circumstances at the premises could have been clarified, potentially altering the outcome of the inspection.

Adjudication of Tax or Cess Due from the Petitioner:
The Court noted that no tax or cess was found due from the petitioner, leading to the disposal of the writ petition with directions for the petitioner to file an application for revocation of the cancellation order, to be adjudicated within a specified timeline, ensuring compliance with procedural fairness and legal remedies.