Back
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SONIA GOKANI, MAUNA M. BHATT, JJ.
M/S VIRANI METAL INDUSTRIES – Petitioner
Versus
STATE OF GUJARAT – Respondent
Special Civil Application No. 13233 of 2022
Decided On : 30-11-2022
Constitution of India, 1950 - Article 226 - State Goods and Services Tax, 2017 - Section 67(2), 107 - Restore GST Registration - Restrained to carry out investigations - Petition is filed seeking directions to quash and set aside order by which GST Registration of petitioner is cancelled and to restore GST Registration forthwith - Prayed that respondents be restrained to carry out investigations since investigation DGGI is already pending – Held, Court could not find specific reason for which proceedings for cancellation of registration has been initiated for second time - Language of show-cause notice, in court opinion, does not communicate reasons and reasons are so general, therefore vague in nature - Court in case of Aggarwal Dyeing (Supra) and thereafter, in series of decisions has reiterated that reasons are heart and soul of order and non-communication of same itself amounts to denial of reasonable opportunity of hearing resulting into miscarriage of justice - Applying same principle, in court opinion, show-cause notice being without any reason, same is bad in law and deserves to be quashed and set aside and hereby quashed and set aside accordingly - Order of cancellation of registration is also quashed and set-aside - Respondents are directed to restore registration of petitioner forthwith - Appeal allowed.
ORDER :
1. By invoking extraordinary jurisdiction under Article 226 of the Constitution of India, this petition is filed seeking directions to quash and set aside the order dated 03.08.2022, by which the GST Registration of the petitioner is cancelled and to restore the GST Registration forthwith. It is also prayed that the respondents herein be restrained to carry out investigations since the investigation by Directorate General of GST Intelligence (for short “DGGI”) is already pending.
2. The facts in brief are as under:
2. Pursuant to issuance of registration certificate, the petitioner was regularly filing monthly and quarterly returns and following the provisions of GST Act.
3. A search at the premises of the assessee was carried out on 19.08.2021, under Section 67(2) of the Act. Panchnama was drawn and documents were seized.
4. Spot verification of the premises was once again carried out on 06.09.2021. The petitioner received SMS that its Input Tax Credit (ITC) has been blocked. Through communication dated 28.09.2021, the petitioner requested the respondent No. 3 to provide reasons for blocking of ITC.
5. A summon dated 01.10.2021, was issued by DGGI, Vadodara Regional Unit calling upon the assessee to appear in person on 11.10.2021.
6. During pendency of the said DGGI investigation, a show-cause notice dated 28.09.2021, was issued by respondent No 3, proposing to cancel the registration.
7. The petitioner filed reply dated 08.10.2021, to the show-cause notice and also filed an application dated 18.10.2021 seeking revocation of suspension of registration.
8. The respondent No. 3 passed an order dated 26.10.2021, for cancellation of registration. In the order dated 26.10.2021, it is stated that the effective date of cancellation is 01.10.2021. The petitioner made an application dated 27.10.2021, seeking revocation of cancellation of registration.
9. In the meanwhile, the petitioner informed to the respondent about change in address w.e.f. 01.11.2021.
10. In response to the application seeking revocation of cancellation of registration, the respondent issued a communication dated 24.11.2021, calling upon the petitioner to appear in-person on 26.11.2021. As the petitioner was unavailable, request was made for an adjournment.
11. The petitioner filed detailed reply dated 03.12.2021, and also preferred an appeal under Section 107 of the Act before Commissioner (Appeals), challenging the order dated 26.10.2021.
12. The Commissioner (Appeals) vide order dated 09.05.2022, allowed the appeal with directions to respondents to activate the Registration Number of the petitioner.
13. Pursuant to the order of Commissioner (Appeals) dated 09.05.2022, an order dated 12.05.2022 was passed by respondent No. 3, restoring registration.
14. Another show-cause notice dated 17.05.2022, was served upon the petitioner proposing cancellation of registration, which reads as under:
“Noncompliance of any specified provisions in the GST Act or the Rules made thereunder as may be prescribed.”
15. The petitioner filed detailed reply dated 25.05.2022, requesting the Department to decide the show-cause notice within two weeks.
16. It is case of the petitioner that despite the same, the petitioner was served with letter dated 29.07.2022 calling upon to remain personally present with the documents i.e. bills, e-way bills, transport receipts, VAT receipts, in-ward and out-ward entries etc. To which the petitioner responded on 01.08.2022 and informed that in view of pending investigation by DGGI, all the documents are with the office of DGGI.
17. It is case of the petitioner that despite reply dated 01.08.2022, suo-moto order dated 03.08.2022 was served cancelling registration. In the order dated 03.08.2022, it is stated that the registration of the petitioner stands canceled
SupremeToday
An order cancelling a registration under statutory provisions must be a speaking order, assigning specific reasons for the decision. The failure of an assessee to respond to a show cause notice does ....
The importance of providing detailed reasons for cancellation of registration and the need for compliance with the principles of natural justice.
An adjudicating authority is mandatorily obligated to issue a reasoned, speaking order when cancelling a registration, regardless of whether a response was filed. Failure to provide specific reasons ....
An adjudicating authority exercising statutory power to cancel tax registration must record clear reasons for its decision. As a matter of natural justice and fair procedure, an order devoid of reaso....
Cancellation of GST registration must follow due process, including a clear show-cause notice and a reasoned order, to uphold the principles of natural justice.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
