2024 (9) TMI 381 - HC - GST

Cancellation of petitioner s GST registration with retrospective effect - impugned SCN is not intelligible as it does not specify the reason for cancelling the petitioner s GST registration - violation of principles of natural justice - HELD THAT - In view of the undisputed fact that the impugned SCN does not mention any intelligible reason for proposing to cancel the petitioner s GST registration, it is considered apposite to set aside the impugned order as having been passed in violation of the principles of natural justice. The only reason stated in the impugned order for cancelling the petitioner s GST registration is that it appeared that the petitioner obtained the registration by fake documents a reason which did not find any mention in the impugned SCN. The impugned SCN and the impugned order are set aside. The petitioner s GST registration is directed to be restored forthwith. Petition disposed off.

Summary

Issues:
1. Impugning the cancellation of GST registration with retrospective effect.
2. Lack of specific grounds in the Show Cause Notice for cancellation.
3. Allegation of securing GST registration by fake documents.
4. Delay in the appeal process.
5. Violation of principles of natural justice in passing the impugned order.

Analysis:

The petitioner challenged the cancellation of their GST registration with retrospective effect from 07.07.2017, citing that the impugned order lacked sustainability. The cancellation was based on the petitioner's alleged failure to appear for a personal hearing or submit supporting documents, with the proper officer tentatively concluding that the registration was obtained through fake documents. Notably, no tax liability was determined from the petitioner. The Show Cause Notice (SCN) issued prior to the cancellation only mentioned "Others" as grounds, failing to provide a specific reason for the proposed cancellation, rendering it unintelligible.

The High Court noted that the impugned SCN did not contain any intelligible reason for the proposed cancellation, violating the principles of natural justice. The allegation of fake document usage leading to registration was not part of the SCN, raising concerns about the basis for the proper officer's conclusion. Despite the petitioner filing an appeal, which was pending for an extended period and possibly time-barred, the lack of clarity in the SCN led the Court to set aside the impugned order.

During the proceedings, the respondent argued that physical verification revealed the petitioner's premises were non-existent, justifying the cancellation. However, the Court found this argument irrelevant as the impugned SCN did not raise such allegations, and no mention of physical verification was made in the impugned order. Ultimately, the Court set aside both the impugned SCN and order, directing the restoration of the petitioner's GST registration without prejudice to any future proceedings by the respondent for statutory non-compliance or dues recovery.

In conclusion, the Court's decision emphasized upholding natural justice principles and ensuring that show cause notices provide specific grounds for proposed actions, highlighting the importance of procedural fairness in administrative decisions.