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November 28, 2022

Order of cancellation of GST registration quashed by the High Court as it was Vague

by CA Shivam Jaiswal in GST, Legal Court Judgement

Order of cancellation of GST registration quashed by the High Court as it was Vague

Facts and Issues of the Case

The petitioner claims that the cancellation of the petitioner’s registration under the GST Act, 2017, is illegal, arbitrary, and against the principles of natural justice. The petitioner also requests a direction to invalidate the impugned actions taken by the first respondent on October 20,2022.

Learned Government Pleader for Commercial Taxes-II and learned counsel for the petitioner Sri Bhaskar Reddy Vemireddy were both heard.

The complaint of the petitioner’s learned counsel is that the impunged show cause notice, dated October 1, 2022, and the order cancelling the registration, dated October 20, 2022, were both unable to show any violations because, in the show cause notice, it was stated that “in case the registration has been obtained through fraud, wilful misstatement or suppression of facts,” and similarly in the cancellation order, “On verification of GSTR 1 versus GSTR 3B returns and sales turnover, it is found that, during a period of five months, the TRP has made purchases and sales of scrap valued at Rs. 9.63 crores for which he has not submitted clear records,” it has been stated. The registration is hereby cancelled since the transactions seem suspicious (emphasis supplied ).

According to learned counsel, the show cause notice and the order for cancellation of registration, are not legal in the eyes of the law because they do not disclose any error, fraud, or misconduct caused by the petitioner in the course of his business. The learned counsel would argue that the Hon. High Court of Telangana issued an order setting aside the cancellation of the GST registration in W.P.Nos. 39498 and 39502 of 2022 due to similar circumstances. In addition, the Hyderabad Commissionerate’s Principal Commissioner of Central Tax was tasked with looking into the first respondent’s behaviour and operations and taking remedial steps.

Observation by the Court

The court have considered the impugned show cause notice and order for cancellation of registration and found force in the submission of learned counsel for the petitioner , for both show cause notice as well as the order of cancellation of registration are suspiciously vague and fail to mention the alleged misdeed or fraud that the petitioner is allegedly committed.

The order of cancellation of registration states that the petitioner has not provided “clear records,” despite the show cause notice stating that it is “in case” he has engaged in fraud, willful misstatement, or the suppression of facts. Both of them are not clear enough to understand the mind of the issuing authority. Therefore, the court  have no demur to hold that both impugned show cause notice as well as the order for cancellation of registration are not sustainable in the eye of law. Insimilar circumstances, Hon’ble High Court of Telangana has set aside the impugned order of cancellation of the GST registration of the petitioner therein.

The impugned order for cancellation of registration dated October 20, 2022, and show cause notice dated October 1, 2022, are hereby set aside, allowing the first respondent to issue a fresh show cause notice in accordance with the applicable laws and regulations to the petitioner, indicating therein the clear reasons for any violations and providing ample time for the petitioner herein to submit objections or reasons and take the matter into consideration. no costs.

Conclusion

The court ruled the matter in favour of the petitioner. The court ordered, the GST officer to issue a fresh show cause notice in accordance with the applicable laws and regulations to the Tax payer which is not vague and indicating therein the clear reasons for any violations of GST law, rules and / or any fraud conducted by the Taxpayer

Order-of-cancellation-of-GST-registration-quashed-by-the-High-Court-Andhra-Pradesh-HC

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