2022 (12) TMI 1134 - HC - GST

Cancellation of GST registration granted to the petitioner - application for revocation was beyond the time prescribed under Section 30 of the CGST/SGST Acts - HELD THAT - It is a principle at the heart of administrative law that where the law requires a thing to be done in a particular manner, it must be done in that manner alone. - The action taken by the officer by initiating proceedings in form GST REG-31 of the CGST Rules and completing the proceedings for cancellation of registration by issuing Ext.P1 order is clearly without jurisdiction. If the Officer wishes to initiate proceedings for cancellation of registration, he must issue a notice as specified in Rule 21 of the CGST Rules and in form GST REG-17 and not in form GST REG-31. The Division Bench of the Gujarat High Court in AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) 2022 (4) TMI 864 - GUJARAT HIGH COURT has considered an almost identical situation. The Court considered the contents of the show cause notice issued in that case and came to the conclusion that the show cause notice was woefully inadequate inasmuch as it did not specify the reasons which compelled the Officer to initiate action for cancellation of registration. The Supreme Court in GOVERNMENT OF KERALA ANR. VERSUS MOTHER SUPERIOR ADORATION CONVENT 2021 (3) TMI 93 - SUPREME COURT has taken the view that where concessions or exemptions are granted with a specific purpose of promoting or encouraging a certain activity the principle that such concessions/exemptions must be interpreted in favour of the revenue does not apply - In the facts of these cases, this Court is concerned with the provisions of Sections 29/30 of CGST/SGST which gives to the power to cancel registration and also to revoke it. These are not provisions which need to be interpreted with reference to the principles laid down in the COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT and in GOVERNMENT OF KERALA ANR. VERSUS MOTHER SUPERIOR ADORATION CONVENT 2021 (3) TMI 93 - SUPREME COURT . The quashing of the impugned order of cancellation will not have the effect of absolving the petitioner of any fiscal liability - Petition allowed.

Summary

Issues:
1. Cancellation of registration under CGST/SGST Acts.
2. Validity of show cause notice and cancellation order.
3. Interpretation of provisions of Sections 29 and 30 of CGST/SGST Acts.
4. Compliance with procedural requirements.
5. Applicability of judgments from other High Courts.
6. Interpretation of fiscal legislations.
7. Principles of administrative law.

Detailed Analysis:

1. The petitioner challenged the cancellation of registration under the Central Goods and Services Tax Act and the State Goods and Services Tax Act. The cancellation was done under Section 29 of the CGST/SGST Acts.

2. The petitioner contended that the show cause notice preceding the cancellation was illegal and unsustainable. The notice was issued in Form GST REG-31 instead of the required Form GST REG-17. The petitioner also argued that the notice lacked specific details and reasons for cancellation.

3. The Senior Counsel for the petitioner argued that the cancellation proceedings were flawed and not in compliance with the provisions of the CGST/SGST Acts. The petitioner's delay in filing returns and payment of tax was attributed to financial stress, not wilful default.

4. The Government Pleader defended the cancellation citing provisions of Sections 29 and 30 of the CGST/SGST Acts. They argued that the cancellation was justified due to the petitioner's failure to comply with tax laws. The Government Pleader also referenced judgments from other High Courts to support their position.

5. The Court found in favor of the petitioner, ruling that the cancellation process was flawed. The show cause notice was issued in the wrong form and lacked necessary details, rendering it vague and inadequate. The Court cited administrative law principles and previous judgments to support its decision.

6. The Court rejected the argument that fiscal legislations must be strictly interpreted in favor of revenue, emphasizing the need for proper compliance with procedural requirements. The Court distinguished between provisions related to cancellation of registration and those concerning exemptions or concessions.

7. As a result, the Court allowed the writ petition, quashed the cancellation order, and directed the petitioner to fulfill all fiscal obligations within a specified timeframe upon restoration of registration. The Court emphasized that the cancellation did not absolve the petitioner of any fiscal liabilities.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal principles, and the Court's decision in favor of the petitioner.