2025 (1) TMI 191 - HC - GST

Cancellation of registration of petitioner - SCN is not a reasoned one - violation of principles of natural justice - HELD THAT - Issue decided in the case of M/S. NICE ENTERPRISES VERSUS THE DEPUTY COMMISSIONER ST STUI 2024 (9) TMI 98 - TELANGANA HIGH COURT where it was held that 'There are substance in the argument of learned counsel for the petitioner that such a notice runs contrary to principles of natural justice and deprives the assessee to file an effective reply to the show cause notice.' The impugned order set aside - petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issue presented and considered in this judgment is whether the show cause notice for cancellation of registration under Section 29(2)(e) of the Central Goods and Services Tax Act, 2017, is valid when it lacks specific factual details and merely reproduces the statutory language.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents:

The legal framework at the center of this issue is Section 29(2)(e) of the Central Goods and Services Tax Act, 2017, which allows for the cancellation of registration obtained by means of fraud, willful misrepresentation, or suppression of facts. The judgment also references principles of natural justice, as highlighted in precedents such as Canara Bank vs. Debasis Das and Rajesh Kumar vs. CIT, which emphasize the necessity for notices to be precise and unambiguous, providing adequate information to the recipient to enable an effective response.

Court's Interpretation and Reasoning:

The Court interpreted that the impugned show cause notice was deficient as it merely reproduced the statutory language without providing specific factual details or the nature of the alleged breach. The Court emphasized that such notices must contain sufficient factual context to allow the recipient to respond effectively, aligning with principles of natural justice.

Key Evidence and Findings:

The Court found that the show cause notice lacked any factual details or descriptions of the alleged fraud, willful misrepresentation, or suppression of facts. This absence of detail rendered the notice cryptic and an example of non-application of mind, making it vulnerable to challenge.

Application of Law to Facts:

The Court applied the principles of natural justice and the need for specific factual details in notices to the facts of the case. It concluded that the impugned notice did not meet these requirements, as it failed to provide the petitioner with sufficient information to prepare a defense or response.

Treatment of Competing Arguments:

The Court acknowledged the respondents' concession that the issue was covered by a previous order of the Court. The respondents did not provide any substantial argument to counter the petitioner's claim that the notice was deficient.

Conclusions:

The Court concluded that the impugned show cause notice was invalid due to its lack of specific factual details and failure to comply with principles of natural justice. Consequently, the notice was set aside, and the respondents were granted liberty to proceed against the petitioner in accordance with the law, provided they issue a properly detailed notice.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:

The Court emphasized: "Mere reproduction of offending clause or enabling provision cannot be a reason to give stamp of approval to a show cause notice which lacks minimum essential details."

Core Principles Established:

The judgment reinforces the principle that show cause notices must contain specific factual details and not merely reproduce statutory language. This ensures compliance with principles of natural justice, allowing the recipient to prepare an effective response.

Final Determinations on Each Issue:

The Court set aside the impugned show cause notice dated 29.02.2024 due to its lack of factual detail and non-compliance with natural justice principles. The respondents were given the liberty to issue a new notice in accordance with the law, ensuring it contains the necessary factual details.