2023 (10) TMI 932 - HC - GST

Cancellation of GST registration of petitioner - non-conduct of any business from the declared place of business - issuance of invoice or bill without supply of goods or services - Right of cross-examination allowed - no violation of principles of natural justice - HELD THAT - In the present case, the petitioner was afforded an opportunity to support his case. However, he did not produce convincing proof that he was, in fact carrying on any business from the declared place of his business. The Supreme Court in the case of State of Kerala v K.T. Shaduli and Nallakandy Yusuff 1977 (3) TMI 160 - SUPREME COURT opined that the opportunity to prove the correctness or completeness of return would carry the right to examine the witnesses and the right to cross-examine the witnesses examined by the Sales Tax Officer. In the present case, the landlord s statement was taken into account wherein the landlord stated that Room No. IX/205 is owned by him and was rented to the petitioner for conducting iron and steel business from 2012 to May 2017. However, after May 2017, no business activity was carried out from there, and the building was rented out to another person since 18th August 2017. The petitioner did not file any document for the change of his business place nor he supported his claim that he was running the business from the given address by producing any documentary or oral evidence. The enquiry conducted by the competent officer is not a trial, but it is summary proceedings to find out whether the registered dealer is conducting any business from his declared place of business or not. There has been no infraction of principle of natural justice or the authority has acted arbitrarily as contended or otherwise. Petition dismissed.

Summary

Issues Involved:
1. Legality of the cancellation of GST registration.
2. Alleged violation of principles of natural justice.
3. Opportunity to cross-examine the landlord.

Summary:

Issue 1: Legality of the cancellation of GST registration
The petitioner, a partnership firm engaged in trading iron and steel items, sought quashing of orders (Exts. P4 and P5) canceling its GST registration effective from 1st July 2017. The cancellation was based on the powers conferred under Section 29(2)(e) read with Rule 21(a) of the CGST/SGST Act, 2017, citing reasons that the petitioner did not conduct any business from the declared place of business and issued invoices without the supply of goods or services. Despite the petitioner's reply to the show cause notice, the registration was canceled. The court noted that the State Tax Officer had the power to cancel the registration if no business activity was carried out from the declared place of business, and the petitioner failed to produce convincing proof of conducting business from the said premises.

Issue 2: Alleged violation of principles of natural justice
The petitioner contended that the impugned orders were illegal, arbitrary, and unjustified, arguing that there was a violation of principles of natural justice as they were not given the opportunity to cross-examine the landlord whose statement was relied upon. The court referred to Section 29 and Rule 21(a) of the GST Rules, emphasizing that the proper officer must provide an opportunity of being heard before canceling the registration. However, the court determined that the petitioner was given such an opportunity but failed to produce evidence supporting their claim of conducting business from the declared premises.

Issue 3: Opportunity to cross-examine the landlord
The petitioner argued that the landlord's statement, which indicated that no business was conducted from the premises after May 2017, should have been subject to cross-examination. The court cited the Supreme Court's judgment in State of Kerala v K.T. Shaduli and Nallakandy Yusuff, which supports the right to cross-examine witnesses. However, the court found that the enquiry conducted by the competent officer was a summary proceeding, not a trial, and the petitioner did not produce any contrary evidence. The court concluded that there was no infraction of the principles of natural justice or arbitrary action by the authority.

Conclusion:
The writ petition was dismissed, with the court holding that the petitioner failed to prove the continuation of business activities from the declared place of business. The petitioner was advised to file an appeal under the relevant provisions of the GST Act if aggrieved by the order.