2023 (12) TMI 828 - HC - GST

Cancellation of GST registration of petitioner - wrongful availment or utilization of input tax credit or refund of tax - SCN neither indicated the venue nor the date and time when the petitioner was required to appear - principles of natural justice - HELD THAT - Pursuant to the show-cause notice, the respondent proceeded to cancel the petitioner s GST registration by the impugned order. The said order did not specify any reasons for cancellation of the petitioner s GST registration except mentioning that no reply to the aforementioned show-cause notice was received - It is important to note that the tabular statement set out in the said order indicated that no Central tax/ State tax/ UT tax/ Integrated tax or cess was ascertained as due and payable by the petitioner. The said show-cause notice is bereft of the necessary particulars so as to enable the petitioner to respond to the same with any clarity. Further, the petitioner was not afforded any opportunity of being heard. This is because, even though the show-cause notice called upon the petitioner to appear for a personal hearing, it did not specify the date, time or the venue of such hearing - The impugned order is also bereft of any reasons. It also does not mention particulars of the invoice or transactions which, according to the concerned authority, are contrary to or in violation of the provisions of the Act. Although the petitioner has not approached this Court immediately after receiving the impugned order, we do not find that the delay is pernicious to the petitioner s claim for restoration of the GST registration. As is apparent, the impugned order cancelling the petitioner s registration was passed in violation of the principles of natural justice and is, thus, liable to be set aside. The impugned order, cancelling the petitioner s GST registration is set aside. The respondent is directed to forthwith restore the petitioner s registration - Petition allowed.

Summary

Issues involved: Impugning the cancellation of Goods and Service Tax (GST) registration due to alleged wrongful issuance of invoices without supply of goods or services, lack of clarity in show-cause notice, violation of principles of natural justice, delay in approaching the court, and restoration of GST registration.

Cancellation of GST registration: The petitioner challenged the cancellation of their GST registration, which was based on a show-cause notice alleging issuance of invoices without supply of goods or services leading to wrongful availment of input tax credit or refund of tax. The notice lacked necessary particulars such as specific invoices, period of issuance, or quantum of wrongful availment, and the cancellation order did not provide reasons or details of the alleged violations, breaching principles of natural justice.

Violation of natural justice: The court noted that the show-cause notice and cancellation order failed to provide essential details or afford the petitioner an opportunity to be heard, as the notice did not specify the venue, date, or time for a personal hearing. The lack of clarity and absence of reasons in the order rendered it deficient and unjust, violating the principles of natural justice.

Delay in approaching the court: Although there was a delay of more than two years in filing the petition after the cancellation of GST registration, the court found that the delay did not harm the petitioner's claim for restoration. The court emphasized that the cancellation was unjust due to procedural flaws, and the delay did not undermine the petitioner's right to challenge the cancellation.

Restoration of GST registration: Considering the procedural irregularities and lack of clarity in the cancellation process, the court allowed the petition and set aside the impugned order cancelling the petitioner's GST registration. The respondent was directed to promptly restore the petitioner's registration, with a reminder that compliance with all legal provisions was still mandatory, and further actions could be taken if violations were found.

Compliance and future steps: The court clarified that the restoration of GST registration did not exempt the petitioner from complying with the law and did not prevent the respondent from taking future actions if any violations were discovered. Additionally, the Central GST authorities were instructed to ensure compliance with the court's order to restore the petitioner's GST registration.