2024 (3) TMI 166 - HC - GST

Principle of uberrima fides (utmost good faith) - Cancellation of GST registration of petitioner - no business activity was being carried out at the said premises - suppression of material fact, as the petitioner has not revealed before this Court that a new registration was obtained by the petitioner subsequent to cancellation of the earlier registration - HELD THAT - The Court having heard the learned counsel appearing on behalf of the petitioner had directed for verification of the premises without having knowledge of the fact that a new registration has been obtained by the petitioner. In the verification, which was done pursuant to the order of this Court dated February 22, 2024, it was found that the factory was operational and the proprietor informed the authorities that he had obtained a new registration prior to filing of the writ petition. Having obtained a new registration was a material fact that should have been brought into the knowledge of this Court. In fact, the Court was hoodwinked by the petitioner in passing an order for verification of the premises by the authorities. The fact that neither was there any averment in the writ petition nor the counsel for the petitioner informed the Court that a new registration has been obtained resulted in sheer wastage of time of the authorities in carrying out the second verification. Article 226 of the Constitution of India is a discretionary jurisdiction which is to be exercised for petitioners who are acting in a good faith. The principle of uberrima fides requires a party that comes to a Court to act in utmost good faith. The above principle is the genesis of the expectation of the Court to pass orders at the behest of the petitioner who has approached the Court with clean hands. The moment this trust is broken and it is discovered that there is suppression of material facts, the Court is bound to dismiss the said petition without granting any relief whatsoever to the petitioner. This writ petition is dismissed on the ground of suppression of material facts. The petitioner shall be at liberty to approach any other forum for appropriate relief.

Summary

Issues:
The judgment involves the cancellation of GST registration due to alleged lack of business activity, subsequent verification revealing operational status post obtaining new registration, and the petitioner's failure to disclose the new registration.

Cancellation of GST Registration:
The petitioner challenged the order cancelling its GST registration, citing lack of business activity at the premises. The authorities found no activity during physical verification and noted the proprietor's unavailability. Despite replying to a show cause notice, the registration was canceled, and the subsequent appeal was dismissed. The respondents alleged suppression of material fact, as the petitioner obtained a new registration post-cancellation, which was not disclosed to the Court.

Suppression of Material Facts:
The Court ordered premises verification unaware of the new registration obtained by the petitioner. Subsequent verification revealed operational status and the new registration, leading the Court to conclude that the petitioner misled the Court by not disclosing this material fact. The judgment cited legal precedents emphasizing the importance of full disclosure and clean hands in approaching the Court, highlighting that suppression of material facts disqualifies a litigant from obtaining relief.

Legal Precedents on Suppression:
The judgment referenced various legal cases to underscore the significance of full disclosure and the consequences of suppression of material facts. It highlighted that one approaching the Court must do so with clean hands, emphasizing the duty of the Court to ensure justice and deter abuse of the legal process. The Court dismissed the writ petition based on the suppression of material facts, emphasizing the importance of acting in good faith and the principle of uberrima fides in approaching the Court.

Conclusion:
The writ petition was dismissed due to the petitioner's suppression of material facts regarding the new registration obtained after the cancellation of the GST registration. The Court stressed the necessity of full disclosure and acting in good faith when approaching the Court, emphasizing that failure to disclose material facts can lead to the dismissal of the petition without granting any relief.