2024 (1) TMI 434 - HC - GST

Cancellation of registration of the petitioner and its relevant date - SCN does not give any reason or detail - violation of principles of natural justice - HELD THAT - Perusal of letter dated 12.06.2023 shows that there is an allegation that one Neeraj Enterprises had issued invoices without any underlying supply of goods or services and passed on fraudulent input tax credit to various recipients and petitioner is alleged to be one of the such recipients. It is held that the show cause notice does not contain the requisite details, the same is not sustainable and is liable to be quashed and even the letter dated 12.06.2023 does not give any clarity as to the allegation of availing of fraudulent input tax credit by the petitioner. Accordingly, the show cause notice is set aside. It would be, however, open to the respondent to take further action in accordance with law inter alia, cancellation of registration with retrospective effect. However, the same would be in accordance with law and pursuant to a proper Show Cause Notice and an opportunity of hearing being given to the petitioner. Petition disposed off.

Summary

Issues:
The issues involved in the judgment are the suspension of registration based on a show cause notice lacking details, allegations of fraudulent input tax credit, and the petitioner seeking cancellation of registration.

Suspension of Registration:
The petitioner challenged a show cause notice dated 05.07.2023 suspending their registration and requested the respondent to cancel the registration from the date of the last filed return in July 2023. The petitioner argued that the notice did not provide reasons or details, only referring to a letter from the Assistant Commissioner. The court accepted notice and disposed of the petition on the same day.

Allegations of Fraudulent Input Tax Credit:
The letter dated 12.06.2023 alleged that Neeraj Enterprises issued invoices without actual supply of goods or services, passing fraudulent input tax credit to recipients, including the petitioner. However, upon review of the letter and its annexure, it was unclear which entry related to the petitioner or the alleged invoice without a genuine supply. The court found the lack of clarity in the notice and the letter, leading to the quashing of the show cause notice.

Cancellation of Registration:
Although the petitioner expressed a desire to cease business due to the suspension of registration, the court set aside the show cause notice due to insufficient details. The respondent was given the option to proceed with cancellation in compliance with the law, ensuring a proper show cause notice and an opportunity for the petitioner to be heard. The petitioner was advised to follow the legal procedure for cancellation if desired. The petition was disposed of accordingly.