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TMI Blog2024 (9) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... rged, no prejudice has been caused to the respondents. It was unnecessary for the respondents to cancel the GST Registration and they could have considered any other penalty which is more proportionate to the violation of law - the cancellation of GST Registration on the pretext of violation of Rule 86B is a disproportionate punishment imposed on petitioner and is liable to be interfered in exercise of the power conferred on this Court under Article 226 of the Constitution of India. Consideration by the court of alleged violation of Rule 21 (b) and Rule 21 (e) - HELD THAT:- How a prima facie investigation could be the basis of an order of cancellation of GST Registration without the investigation being completed, is not explained by the counsel for the respondents. The respondents ought to have waited for the investigation to be completed before imposing the drastic penalty of cancellation of GST Registration - It shocks the conscience of the Court to find an extreme penalty of the nature of cancellation of GST Registration being imposed on a business on the basis of a prima facie investigation conducted by the respondents - The said action of the respondents is thus clearly arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable supply other than exempt supply and zero-rated supply in a month exceeds rupees fifty lakh. 6. Certain data is mentioned therein which indicates that the petitioner has indeed violated the said provision and had used the amount available in Electronic Credit Ledger to discharge his liability towards output tax in excess of 99% from October 2021 to March, 2022, April 2022 to March 2023 April 2023 to January 2024. 7. No doubt, Rule 21 (g) enables cancellation of GST Registration if there is a violation by registered person of Rule 86B, but one has to see whether the violation is serious enough to warrant cancellation of the GST Registration, which would practically mean death of the business of the petitioner. 8. It is not in dispute that the amount available in Electronic Credit Ledger of the petitioner is the petitioner s own money and it has been used to discharge the petitioner s tax liability, though in excess of 99% of such tax liability. 9. It is not as if there has been any default in discharge of tax liability as such by the petitioner, causing any loss to the Department, since the Show Cause Notice itself was issued by the Department on 17.01.2024 for the period Oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise of writ jurisdiction by the High Court in the presence of an alternative remedy. This Court has observed : (Radha Krishan Industries case21, SCC p. 795, para 27) 27. The principles of law which emerge are that: 27.1. The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well. 27.2. The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternative remedy is available to the aggrieved person. 27.3. Exceptions to the rule of alternative remedy arise where : (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged. 27.4. An alternative remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not backed by any statutory provision. Rule 164 enables the Rule making authority to frame the Rule 86B or other Rules, but the Rules must have backing in the main body of the statute. Otherwise the Rule would be ultra vires. 25. We do find force in the petitioner s contention that Rule 86B of the Act has no statutory backing and appears to be ultra vires the provisions of the HPGST Act, 2017. 26. But we need not base our decision on the said issue. 27. Since the tax liability of the petitioner towards output tax stood discharged, no prejudice has been caused to the respondents. It was unnecessary for the respondents to cancel the GST Registration and they could have considered any other penalty which is more proportionate to the violation of law. 28. In Arnab Ranjan Goswami v. Union of India 2 (2020) 14 SCC 12 : (2020) 4 SCC (Cri) 663, at page 40 the Supreme Court held: 39. A litany of our decisions to refer to them individually would be a parade of the familiar has firmly established that any reasonable restriction on fundamental rights must comport with the proportionality standard, of which one component is that the measure adopted must be the least restrictive measure to e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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