GST registration cannot be revoked due to legally erroneous proceedings
Facts and issues of the cases
Notice in this writ petition was issued on 10.05.2022, after hearing the matter substantially.It is a matter of record, that at that juncture, the respondent/revenue was represented by its senior standing counsel i.e., Mr Harpreet Singh.Since then, counter-affidavit has been filed on behalf of the respondent/revenue.As would be evident from the extracts of the proceedings held on 30.08.2022, we had asked Mr Rajesh Jain, who appears for the petitioner, as to whether the vakalatnama had been executed in his favor by the liquidator appointed by the NCLT.Mr Jain has answered in the affirmative.
Court had examined the record.The vakalatnama executed by Mr Anil Mehta, Liquidator (Pratibha Industries Ltd) [“PIL”] in favor of Mr Jain, is on the Court record. Insofar as the other part of the directions is concerned, which is that we had asked Mr Anish Roy to take instructions, as to whether the respondent/revenue would like to revisit its position, Mr Roy says that the respondent/revenue will reexamine the issue, as to the existence of Pratibha Industries Ltd., in the backdrop of the information contained in the appeal filed before the Joint Commissioner, Central Goods and Service Tax, Appeals-I, Delhi i.e., the Appellate Authority.A perusal of the extracts of the order dated 30.08.2022 would show, that the following is not in dispute:In the show-cause notice [“SCN”] issued to the petitioner on 08.07.2021, no reasons were furnished.A subsequent SCN was issued on 17.11.2021, whereby, the petitioner-consortium, for the first time, came to know that the respondent/revenue had cancelled the registration, on the ground that PIL was found not to be in existence, when inspection was carried out on 05.07.2021.
Observation by the court
This aspect of the matter, that is, an inspection was carried out on 05.07.2021 was not put to the petitioner-consortium, when SCN dated 08.07.2021 was issued. Although the petitioner-consortium claims, that it had submitted a reply dated 23.11.2021; evidently, the same was not uploaded on the designated portal. It is Mr Jain’s contention though, that the reply was uploaded on the website of the respondent/revenue. That in the appeal preferred by the petitioner, information was submitted, which alluded to the fact that PIL had relocated itself. In the impugned order dated 22.02.2022 passed by the Joint Commissioner, CGST-I, Delhi there was no discussion with regard to assertions made in that behalf by the petitioner-consortium. Given these facts, Court was in the view, that the impugned order cannot be sustained for the following reasons.
- Firstly, the SCN dated 08.07.2021 gave no clue whatsoever, as to what was the infraction committed by the petitioner-consortium, and hence the case/allegation it had to meet.
- Secondly, although inspection of PIL’s premises was carried out on 05.07.2021, it did not find mention in the SCN dated 08.07.2021. Besides this, no notice of physical inspection was given. The concerned authority, having exercised this option under Rule 25 of the CGST Rules, 2017, it had to give notice. [See judgement dated 26.04.2022, passed in W.P (C) 8451/2021, titled Micro Focus Software Solutions India Pvt Ltd. vs. Union of India & Anr; judgement dated 26.08.2022, passed in W.P (C) 10408/2022, titled Curil Tradex Pvt. Ltd. vs The Commissioner, Delhi Goods and Service Tax & Anr.]
- Thirdly, another SCN dated 17.11.2021 was issued, which is not contemplated under the CGST Act, 2017 [in short “Act”].
- Fourthly, the order dated 22.02.2022 passed by the Joint Commissioner, Central Goods and Service Tax, Appeals-I, Delhi is bereft of reasons. The order does not deal with the information given by PIL as regards its relocation.
In sum, the entire proceedings, right up to the stage of passing of the order-in-appeal was legally flawed. Accordingly, the impugned order is set aside.Liberty is, however, given to the respondent/revenue, to issue a fresh SCN, if deemed necessary, with regard to the registration certificate, issued under the Act. However, in the meanwhile, the registration of the petitioner shall be restored.
Furthermore, on account of the hiatus created due to the cancellation of registration of the petitioner-consortium, Court was told by Mr Jain, that the petitioner-consortium could not file returns. Mr Jain says, that the last return was filed in August, 2021.Having regard to the aforesaid, further four weeks are granted to the petitioner-consortium to file the returns, for the relevant period.It goes without saying, that for the petitioner-consortium to file the returns, the designated portal concerning the petitioner-consortium will have to be activated.The respondent/revenue will do so, within forty eight hours of the receipt of a copy of the instant judgment.Given the circumstances in which the petitioner was placed, on account of the actions of the respondent/revenue, no interest or penalty will be levied on account of delay in filing the pending returns.However, this window will remain open for the petitioner-consortium only for four weeks, which will run from the date of receipt of a copy of the judgment.
The writ petition is disposed of in the aforesaid terms. Consequently, pending application also stand closed. Parties will act based on the digitally signed copy of the order.Pratibha-Mosinzhstroi-Consortium-Vs-Commissioner-of-CGST-Delhi-High-Court-W.P.C-72892022.