2023 (2) TMI 38 - HC - GST

Cancellation of registration of petitioner - petitioner has assailed the impugned SCN on the ground that it does not disclose any reason or ground for proposing cancellation of its registration and therefore none that could be addressed by the petitioner - HELD THAT - The submissions that the concerned officer had no option but to choose from a drop down menu, is clearly not the answer to the challenge laid by the petitioner to the impugned SCN. In the event, the GST portal cannot be adopted to include further explanation as to the reasons for which the proposed action is contemplated, show cause notices such as the impugned SCN would be rendered meaningless and would fail to serve the purpose of issuing a show cause notice, at all. If the concerned authorities find that they are unable to communicate the allegations in respect of which the response is elicited by way of a show cause notice, by selecting the options as available on the electronic system; the concerned authorities may consider issuing a physical show cause notice. The show cause notice must clearly state the allegations that the concerned noticee has to meet. This being the essence of a show cause notice, any notice that does not qualify this criterion, cannot be considered as a show cause notice. The impugned SCN dated 06.10.2022 and, consequentially, the impugned order dated 21.10.2022 are set aside - Petition allowed.

Summary

Issues: Impugning a Show Cause Notice and Order for GST registration cancellation

Impugned Show Cause Notice (SCN):
The petitioner challenged a Show Cause Notice (SCN) dated 06.10.2022, calling for the cancellation of its Goods and Services Tax (GST) registration. The petitioner contended that the SCN lacked any specific grounds for the proposed cancellation, rendering it incapable of eliciting a meaningful response. The SCN merely cited "others" as the reason for cancellation, failing to provide adequate information for the petitioner to address the allegations. The court emphasized that SCNs are essential to uphold principles of natural justice and enable informed decision-making. As per established norms, SCNs should outline clear reasons for proposed actions to allow the concerned party to respond effectively. In this case, the court ruled that the impugned SCN did not fulfill the criteria of a valid notice, as it did not provide sufficient details for the petitioner to understand and address the allegations.

Response to Impugned SCN:
The petitioner responded to the SCN through a letter dated 18.10.2022, highlighting the lack of proper information in the notice. The respondent argued that the reason for cancellation was mentioned in the remarks column of the officer's portal, which was not part of the communicated SCN. The respondent explained that the officer selected "others" from a drop-down menu on the GST portal as none of the available reasons were deemed suitable. However, the court noted that the absence of relevant information in the issued SCN, such as reference to a letter dated 22.09.2022 or its contents, hindered the petitioner's ability to comprehend the allegations against them. The court emphasized that relying solely on the electronic system without providing necessary details in the notice could undermine the purpose of issuing a show cause notice.

Judgment and Conclusion:
The court set aside the impugned SCN dated 06.10.2022 and the subsequent order dated 21.10.2022 for cancelling the petitioner's registration. The ruling clarified that a valid show cause notice must clearly state the allegations to be addressed by the noticee. The judgment did not prevent the authorities from issuing a fresh show cause notice and making a lawful decision after granting the petitioner a fair opportunity to present their case. Ultimately, the petition was allowed in favor of the petitioner, emphasizing the importance of adherence to procedural fairness and providing detailed reasons in show cause notices to ensure effective communication and due process in such matters.