2024 (7) TMI 528 - HC - GST

Cancellation of GST registration of petitioner - inadequate SCN - violation of principles of natural justice - HELD THAT - It is apparent that the impugned SCN fails to meet the requisite standards of a show cause notice as it does not clearly specify the reasons as to why the petitioner s GST registration was proposed to be cancelled. Although it is alleged that the registration has been obtained by means of fraud, wilful misstatement or suppression of facts, it fails to disclose the precise nature of the fraud or; it does not specify which statement is alleged to be a wilful misstatement; and it does not disclose the facts that are allegedly suppressed - The purpose of a show cause notice is to afford the noticee an opportunity to respond to the allegations. It is clear that such a notice, which does not specify the nature of the allegations is incapable of eliciting a meaningful response. The order for cancellation of registration merely refers to the impugned SCN which, does not set out any intelligible reason for proposing to cancel the petitioner s GST registration - The impugned SCN as well as the impugned order dated 08.08.2023 cancelling the petitioner s GST registration are set aside. The petitioner s GST registration is directed to be restored forthwith - the petitioner s application for revocation of the said order is rendered infructuous - petition allowed.

Summary

Issues:
Challenge to cancellation of GST registration based on inadequate show cause notice.

Analysis:
The petitioner, a registered entity under the Central Goods and Services Tax Act, filed a petition seeking to quash a Show Cause Notice (SCN) dated 02.05.2023 and subsequent Order of Cancellation of Registration dated 08.08.2023. The SCN alleged that the registration was obtained through fraud, wilful misstatement, or suppression of facts but failed to provide specific details. The court noted that the SCN did not meet the necessary standards as it did not clearly specify the reasons for proposing the cancellation. The purpose of a show cause notice is to allow the noticee to respond to the allegations, which was not possible in this case due to lack of clarity in the notice.

The Order of Cancellation of Registration dated 08.08.2023 also lacked reasoning and merely referred to the inadequate SCN. The court found that the cancellation order did not provide any intelligible reason for the cancellation of GST registration. Consequently, the court allowed the petition, setting aside the impugned SCN and the order cancelling the petitioner's GST registration. The court directed the restoration of the petitioner's GST registration and declared the application for revocation of the order as infructuous.

The court clarified that its order did not prevent the respondent from issuing a fresh show cause notice with clear reasons if desired. All rights and contentions of the parties were reserved, and the petition was disposed of solely on the basis of the inadequacy of the original SCN. Additionally, pending applications were also disposed of as part of the judgment.