2022 (11) TMI 901 - HC - GST

Cancellation of the registration of the petitioner - principles of natural justice followed or not - HELD THAT - On going through the impugned show cause notice and order for cancellation of registration and found force in the submission of learned counsel for the petitioner, for, both show cause notice as well as the order of cancellation of registration are dubious enough and failing to divulge the misdeed or fraud allegedly committed by the petitioner. While the show cause notice says that in case the petitioner has committed any fraud, wilful misstatement or suppression of facts, the order of cancellation of registration says that he has not submitted clear records. Both of them are not clear enough to understand the mind of the issuing authority. Both impugned show cause notice as well as the order for cancellation of registration are not sustainable in the eye of law - the impugned order for cancellation of registration dated 20.10.2022 and show cause notice dated 01.10.2022 are hereby set aside giving liberty to the 1st respondent to issue fresh show cause notice in accordance with the governing law - Petition allowed.

Summary

Issues:
Cancellation of GST registration - legality, principles of natural justice violation, sustainability in law, setting aside impugned proceedings, violation of GST Act, 2017.

Analysis:
The petitioner challenged the cancellation of their GST registration as illegal, arbitrary, and not following natural justice principles. The petitioner sought to set aside the impugned proceedings of the 1st respondent dated 20.10.2022. The petitioner's counsel argued that the show cause notice and the cancellation order failed to demonstrate any violation or misdeed committed by the petitioner. Specifically, the show cause notice mentioned the possibility of fraud, wilful misstatement, or suppression of facts, while the cancellation order cited the lack of clear records for transactions worth Rs.9.63 Crores. The counsel highlighted a similar case in the High Court of Telangana where the cancellation of GST registration was set aside, and remedial steps were directed against the concerned authority.

The High Court examined the show cause notice and the cancellation order and agreed with the petitioner's counsel that both documents were unclear and did not specify any wrongdoing by the petitioner. The court noted that the vague language used in the show cause notice and the cancellation order failed to provide a clear understanding of the alleged violations. Drawing parallels with the Telangana High Court's decision in a similar case, the court held that the impugned show cause notice and cancellation order were unsustainable in the eyes of the law. Consequently, the court allowed the writ petition, setting aside the cancellation order and show cause notice dated 20.10.2022 and 01.10.2022, respectively. The 1st respondent was granted the liberty to issue a fresh show cause notice in compliance with the law, clearly stating any violations and allowing the petitioner sufficient time to respond before passing an appropriate order. No costs were awarded, and any pending interlocutory applications were closed as a result of the judgment.