2024 (9) TMI 604 - HC - GST

Cancellation of GST registration - SCN has not stated any reason for cancellation - violation of principles of natural justice - HELD THAT - The SCN did not mention any intelligible reason. It merely set out the provision that would enable the proper officer to cancel a taxpayer s registration on the ground of violation by the provisions of the CGST Act/DGST Act or the Central Goods and Services Tax Rules, 2017/ Delhi Goods and Services Tax Rules, 2017 leading to wrongful availment or utilization of input tax credit or refund of tax. The SCN is bereft of any particulars, which would provide any clue to the taxpayer as to the reasons for cancellation of the petitioner s GST registration. The SCN also did not specify any venue, date or time for the petitioner to appear for the personal hearing. It is also material to note that although, the SCN did not propose any action for retrospectively cancelling the petitioner s GST registration, the impugned cancellation order cancelled the petitioner s GST registration from the date when it was granted, that is, with effect from 15.10.2018. It is apparent that the impugned cancellation order is void as it was passed in violation of the principles of natural justice. First, the petitioner was not provided any intelligible reasons for proposing to cancel its GST registration and also was not afforded an opportunity of being personally heard. Additionally, there was no proposed action for cancelling the petitioner s GST registration with retrospective effect. The impugned cancellation order is also not informed by any reason as it does not set out any reason for cancelling the petitioner s GST registration. The impugned cancellation order and the SCN are set aside. The respondents are directed to forthwith restore the petitioner s GST registration. The petitioner shall file his GST returns, which are due within thirty days and also pay the tax along with interest and penalty, if any. Petition allowed.

Summary

Issues:
- Cancellation of Goods and Services Tax (GST) registration
- Violation of principles of natural justice
- Rejection of applications for revocation of cancellation order
- Lack of intelligible reasons in Show Cause Notice (SCN)
- Absence of opportunity for personal hearing
- Retrospective cancellation of GST registration

Analysis:
The petitioner challenged the cancellation of its GST registration, which was based on a Show Cause Notice (SCN) alleging wrongful invoicing without supply of goods/services. The petitioner's GST registration was suspended without specifying a date for a personal hearing, leading to subsequent rejection of the application for revocation. The court noted that the cancellation order lacked intelligible reasons and violated natural justice principles by not providing a fair opportunity for the petitioner to respond. The order also retroactively canceled the GST registration from the date of its grant, further highlighting procedural irregularities.

The petitioner's subsequent applications for revocation were also rejected without proper reasons or opportunity for a personal hearing, indicating a repeated violation of natural justice principles. The court found the actions of the authorities to be arbitrary and lacking justification, ultimately setting aside the cancellation order and directing the restoration of the petitioner's GST registration. The petitioner was instructed to comply with tax obligations within thirty days, emphasizing the importance of timely filing returns and payment of dues.

The judgment clarified that setting aside the cancellation order did not prevent the authorities from taking lawful actions for statutory violations or dues recovery in the future. By allowing the petition and disposing of pending applications, the court upheld the importance of procedural fairness and adherence to natural justice principles in administrative actions related to GST registrations.