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IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
PANKAJ BHATIA, J.
Drs Wood Products Lucknow Thru. Its Partner Sh. Arun Jindal – Appellant
Versus
State Of U.P. Thru. Prin. Secy. Tax And Registration Lko. And ors. – Respondents
Writ C No. 21692 of 2021
Decided on : 05-08-2022
Section 29 of the CGST Act provides for the cancellation or suspension of registration. The proper officer may cancel the registration if the business has been discontinued, there is a change in the constitution of the business, or the taxable person is no longer liable to be registered. The cancellation of registration does not affect the liability to pay tax and other dues. The cancellation of registration under the CGST Act is deemed to be a cancellation under the U.P. GST Act. The person whose registration is cancelled must pay an amount equivalent to the input tax credit or the output tax payable on the goods held in stock. The amount payable is calculated in the prescribed manner. Section 30 of the U.P. GST Act provides for the revocation of cancellation of registration.
Fact of the Case:
The petitioner, a partnership firm, had its registration under the CGST Act cancelled. The petitioner filed an application for revocation of the cancellation, but it was rejected. The petitioner appealed the rejection before the Appellate Authority, which also dismissed the appeal. The petitioner challenged the orders before the court.
Finding of the Court:
The court found that the show-cause notice for cancellation of registration was vague and lacked any specific allegations or proposed evidence. The order rejecting the application for revocation of cancellation of registration did not provide any reasoning. The Appellate Authority relied on a report from 2018 that was not part of the record. The court held that the quasi-judicial authorities had failed to act in accordance with the GST Act and set aside the orders.
Ratio Decidendi: The court held that the cancellation of registration was arbitrary and violated the principles of administrative justice. The orders of cancellation and rejection were set aside, and the registration of the petitioner was renewed. The court also awarded a cost of Rs. 50,000 to the petitioner for the harassment caused by the arbitrary exercise of power.
Result: The writ petition was allowed, and the orders of cancellation and rejection were set aside. The registration of the petitioner was renewed, and the state government was ordered to pay a cost of Rs. 50,000 to the petitioner.
JUDGMENT :
1. Heard Shri Suyash Agarwal and Shri Alok Singh, learned counsel for the petitioner, learned Standing Counsel for the State and Shri Digvijay Nath Dubey, learned counsel for respondent no.4.
2. The present petition has been filed 18.01.2021 whereby the appeal preferred by the petitioner has been rejected. The said appeal was preferred against the order dated 15.07.2020 whereby the application for revocation of the cancellation of the registration was rejected.
3. The facts, in brief, are that the petitioner is a partnership firm carrying on business of manufacture and trading of Veneer and was granted the registration number under CGST Act 2017. It is also claimed that prior to the enforcement of the GST, the petitioner was registered under the UPVAT Act and the CST Act also. It is also claimed that the assessments were carried out in respect of the petitioner establishment under the VAT Act and the CST Act for the assessment year 2017-18. The petitioner claims to be carrying out the business from the registered place of business as registered with the GST Authorities and are paying taxes. A show-cause notice dated 08.05.2020 was issued to the petitioner under Rule 22(1) of the GST Rules whereby it was alleged that on the basis of the information which has come to the notice of the Assistant Commissioner it appears that your registration is liable to be cancelled for the following reasons:
4. Subsequent thereto, an order came to passed on 22.05.2020 (Annexure -12) wherein the following has been recorded:
The effective date of cancellation of your registration is 22/05/2020."
5. The petitioner while trying to upload his E-Way Bill came to know that the registration of the petitioner -firm has been cancelled on 08.05.2020, as such, the petitioner moved an application for revocation of the order dated 08.05.2020 in terms of the provisions contained in Section 30 of the U.P. GST Act, 2017 (hereinafter referred to as 'the Act'). The said application specifically stated that the fact with regard to cancellation came to the knowledge of the petitioner in the month of June, 2020. In any case, the said application was within the time prescribed under Section 30 of the Act. In response to the said application filed by the petitioner, a show-cause notice was again issued on 13.06.2020 stating that the application for revocation is liable to be rejected for the following reason:
6. In response to the said show-cause notice, the petitioner moved an application seeking 15 days extension of time to give a reply in view of the marriage of the daughter of the petitioner scheduled on 24.06.2020. Without considering the said application, an order came to be passed on 15.07.2020 rejecting the application for revocation of cancellation of the registration on the reasons as recorded in the show cause notice that no satisfactory explanation was received within the prescribed time. The order is quoted hereinbelow:
1. Any Supporting Document – Others (Please specify) – firm was properly issued show cause notice vide ref number ZA090520010436Y. no satisfactory explanation was received within prescribed time.
Therefore, your application is rejected in accordance with the provisions of the Act.”
7. Aggrieved against the said order, an appeal was filed under Section 107 of the Act before the Appellate Authority constituted under the Act. In the grounds of appeal, which are on record
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