2023 (10) TMI 940 - HC - GST

Cancellation of GST registration of petitioner with retrospective effect - petitioner had denied that it was involved in any fraud or made any misstatement and suppressed any facts - no opportunity to object to cancellation of his GST registration provided to petitioner - violation of principles of natural justice - HELD THAT - The impugned order is also not informed by reason, it merely states that the reply submitted by the petitioner was unsatisfactory. Neither the Show Cause Notice nor the impugned order provides any clue as to why the petitioner s GST registration was cancelled. The Show Cause Notice and the impugned order are liable to be set aside. It is also relevant to note that the Show Cause Notice did not propose that the petitioner s registration would be cancelled from the date it was granted. Thus, the petitioner had no opportunity to object to cancellation of his GST registration with retrospective effect. The impugned order and the Show Cause Notice are set aside - Petition allowed.

Summary

Issues involved:
The issues involved in the judgment are the cancellation of GST registration with retrospective effect, violation of principles of natural justice in passing the impugned order, and lack of reasoning in the Show Cause Notice and impugned order.

Cancellation of GST registration with retrospective effect:
The petitioner filed a petition challenging an order passed by the respondent canceling the petitioner's GST registration with retrospective effect from the date on which the registration was granted. The petitioner had initially applied for cancellation of GST registration due to discontinuation of business operations. Subsequently, a show cause notice was issued, alleging fraud, misstatement, or suppression of facts as the basis for cancellation. The petitioner denied the allegations and requested a postponement of the hearing. The impugned order was passed without specifying the grounds for cancellation, violating principles of natural justice. The order and show cause notice were set aside, allowing fresh proceedings if necessary.

Violation of principles of natural justice in passing the impugned order:
The impugned order cancelling the petitioner's GST registration was found to be in violation of the principles of natural justice. The show cause notice did not specify the allegations for cancellation, making it impossible for the petitioner to respond meaningfully. The order lacked reasoning and merely stated the petitioner's reply was unsatisfactory. Both the show cause notice and the impugned order failed to provide any explanation for the cancellation of GST registration, leading to the order being set aside. The petitioner was not given an opportunity to object to the retrospective cancellation of registration.

Lack of reasoning in the Show Cause Notice and impugned order:
The show cause notice and impugned order lacked reasoning and failed to provide specific details regarding the grounds for canceling the petitioner's GST registration. The notice only mentioned general allegations of fraud, misstatement, or suppression of facts without specifying the nature of the alleged offenses. The order did not offer any explanation for the cancellation apart from deeming the petitioner's reply unsatisfactory. This lack of reasoning rendered both the notice and the order liable to be set aside. The petitioner was not informed of the reasons behind the cancellation, depriving them of a fair opportunity to defend against the action.