2023 (9) TMI 1130 - HC - GST

Cancellation of GST registration - non-service of SCN - Violation of principles of natural justice - HELD THAT - The Court had held that by issuing a cryptic show cause notice, the authorities had violated the principles of natural justice. From the impugned order as well as the show cause notice, the reasons for cancellation are not decipherable therefrom. The show cause notice and the impugned order are quashed and set aside. The petition is allowed solely on the ground of violation of principles of natural justice. The show cause notice as well as the order cancelling the registration are quashed and set aside with a liberty reserved to the respondent to issue a fresh notice with particulars of reasons incorporated with details, and thereafter, to provide reasonable opportunity of hearing to the writ petitioner and to pass appropriate speaking order on merits. Petition allowed.

Summary

Issues Involved:
1. Validity of the Show Cause Notice dated 20.01.2023.
2. Validity of the impugned order dated 22.06.2023.

Summary:

Issue 1: Validity of the Show Cause Notice dated 20.01.2023

The petitioner, a proprietor of M/s. H.K. Tradelink, engaged in trading waste and scrap, received a Show Cause Notice dated 20.01.2023 in Form GST REG-17 through the GSTIN Portal. The petitioner argued that no document, either in the form of notice or any other document, was received or served at the registered place of business. The notice granted seven working days to furnish a reply and directed the petitioner to appear personally on 27.01.2023, which was before the completion of the seven working days.

Issue 2: Validity of the impugned order dated 22.06.2023

The petitioner filed a reply on 27.01.2023 in Form GST REG-18, served upon the respondent on the same date. However, the respondent remained silent for almost four and a half months and then passed a non-speaking order on 22.06.2023 for the cancellation of the petitioner's registration in Form GST REG-19, effective from 13.03.2021. The petitioner contended that the Show Cause Notice and the impugned order were vague and lacked reasons for the cancellation of registration. The respondent argued that the registration was found to be fraudulent, obtained by means of fraud, willful misstatement, and suppression of facts.

Court's Findings:

The Court held that the issue is covered by the decision in the case of Aggarwal Dyeing and Printing Works vs. State of Gujarat, which sets out the procedure for cancellation of registration. The Court emphasized that reasons are the heart and soul of an order, and non-communication of reasons amounts to a denial of a reasonable opportunity of hearing, resulting in a miscarriage of justice. The Court noted that the impugned order and the Show Cause Notice did not provide decipherable reasons for the cancellation.

Conclusion:

On the grounds of violation of principles of natural justice, the Show Cause Notice and the impugned order were quashed and set aside. The Court allowed the petition solely on this ground and granted liberty to the respondent to issue a fresh notice with detailed reasons and to provide a reasonable opportunity of hearing to the petitioner. The petitioner is allowed to respond to such notice by filing objections/reply with necessary documents. The Court clarified that it did not go into the merits of the case. Rule is made absolute to the above extent.