2024 (2) TMI 1004 - HC - GST

Cancellation of GST registration of the petitioner - application of the petitioner seeking revocation has also been dismissed - petitioner never received the Show Cause Notice and accordingly did not respond thereto - violation of principles of natural justice - HELD THAT - The grounds for cancellation are different from the grounds in the Show Cause Notice. Petitioner was never intimated as to the real ground for cancellation. Cancellation order also suffers from infirmity in as much as the officer seems to have considered a reply of the petitioner when no such reply has been filed. Further, petitioner was never put to notice that the registration is liable to be cancelled retrospectively. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Petitioner thereafter filed an application seeking revocation. Pursuant to the application for seeking revocation, a Show Cause Notice dated 04.01.2024 was issued to the petitioner, seeking to reject the revocation application. Said Show Cause Notice also required the petitioner to appear once again before the undersigned i.e., the signatory of the notice, however, again, we notice that neither the name nor the designation of the officer issuing the notice was mentioned - Said Show Cause Notice is also defective. The Petitioner thereafter filed a reply on 08.01.2024 to the said Show Cause Notice. Pursuant to the Show Cause Notice, impugned the order dated 16.01.2024 has been passed which states that petitioner has not submitted a reply. Hence, the Show Cause Notice has been adjudicated and the revocation application rejected. Both the Show Cause Notices dated 27.12.2022 and 04.01.2024 as also the impugned order dated 09.01.2023 cancelling the registration of the petitioner retrospectively, and order dated 16.01.2024 rejecting the revocation of cancellation application suffer from infirmity and cannot be sustained - Petitioner shall comply with the provisions of Rule 23 and its provisos of The Goods and Services Tax Rules, 2017 - Petition disposed off.

Summary

Issues involved:
The cancellation of GST registration of the petitioner and the subsequent rejection of the application seeking revocation.

Cancellation of GST Registration:
The petitioner, engaged in manufacturing safety critical products, challenged the cancellation of GST registration. The cancellation was based on a Show Cause Notice citing grounds of non-appearance during physical verification and non-receipt of a reply. However, the cancellation order was found to be flawed as it did not specify the officer's name issuing the notice and the grounds for cancellation were different from those in the Show Cause Notice. The Court emphasized that registration cannot be cancelled retrospectively without objective criteria and proper reasoning.

Revocation Application Rejection:
After filing for revocation, the petitioner received a defective Show Cause Notice lacking officer details. Despite submitting a reply, the revocation application was rejected on the grounds of non-submission of reply. The Court noted discrepancies in the officer's consideration of the petitioner's responses and highlighted the lack of proper application of mind in the decision-making process.

Judgment:
The Court found multiple infirmities in the cancellation and rejection processes, leading to the conclusion that both the Show Cause Notices and subsequent orders were unsustainable. Consequently, the Court set aside the Show Cause Notices, cancellation order, and revocation rejection order, thereby restoring the petitioner's GST registration. The petitioner was directed to comply with relevant GST Rules, and the respondents were permitted to take lawful steps for tax recovery if necessary.