2023 (2) TMI 980 - HC - GST

Cancellation of registration of petitioner - Taxpayer found non-functioning / not existing at the principal place of business - non-speaking order - violation of principles of natural justice - HELD THAT - On bare perusal of the contents of the show cause notice as well as the impugned order, we find that the said show cause notice is absolutely vague, bereft of any material particulars and the impugned order is also vague and a nonspeaking order. It cannot be disputed that with cancellation of registration, the dealer is liable to both civil and penal consequences. To say the least, The Authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. The authority ought to have followed the principles of natural justice, which has not been done in the present case. Not only the order is nonspeaking but cryptic in nature and the reason of cancellation not decipherable therefrom. In such circumstances, the principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences. The order of cancellation of GST registration dated 04.06.2022, the respective GST registration stands revived, forthwith - Petition allowed.

Summary

Issues:
Challenge to cancellation of registration under the Gujarat Goods and Services Tax Act, 2017.

Analysis:
The petitioner sought to challenge the illegal action of the State Tax Officer in canceling their registration under the Gujarat Goods and Services Tax Act, 2017. The State Tax Officer issued a show-cause notice citing the reason that the taxpayer was found non-functioning or not existing at the principal place of business. However, the notice lacked substantiating documents and failed to provide specific details, violating the principles of natural justice. In response, the petitioner contended that the notice did not give reasons for initiating the cancellation process and was issued by an unauthorized person. Subsequently, the State Tax Officer canceled the registration without providing reasons, simply stating "As per attached sheet." The High Court noted that the show-cause notice and the cancellation order were vague, devoid of material particulars, and did not adhere to the principles of natural justice. The Court emphasized that cancellation of registration carries civil and penal consequences, necessitating a clear and reasoned decision. The Court referred to a previous judgment highlighting procedural lapses by State Authorities in similar cases.

The High Court found both the show-cause notice and the cancellation order to be nonspeaking and cryptic, failing to refer to the contents of the notice or the petitioner's response. As a result, the principles of natural justice were violated, warranting the quashing of both the notice and the order. The Court emphasized the need for a lawful process in cancellation proceedings and set aside the impugned documents. The competent Authority was directed to issue a fresh notice for cancellation of registration in compliance with the law. Consequently, the Court allowed the petition, making the rule absolute in the terms mentioned in the judgment. As a result of quashing the notice and the cancellation order, the petitioner's GST registration was revived immediately.