It is unacceptable for a court order to revoke a GST registration after the notice period has expired
Fact and issue of the case
Petitioner is before this Court seeking to challenge the action of the respondent – Authority of cancelling the registration and also of rejecting of application for revocation of cancellation under the Gujarat Goods and Service Tax Act, 2017.
The petitioner is a proprietary concern dealing in all types of scrap. It was granted TIN Number on 13.06.2013 under the Gujarat Value Added Tax Act, 2003 and he is a regular tax payer.
Show cause notice was issued on 24.06.2019 by the respondent by the cancellation of registration on the ground that it has been obtained by means of fraud and willful mistake and by suppression of facts. The petitioner was directed to appear on 28.06.2019, however, when no physical notice was received and as the petitioner is not techno savvy, he could not accede.
On 26.07.2019, pursuant to the said notice, respondent cancelled the registration of the petitioner without making any mention or reason of cancellation.
Petitioner preferred an application for revocation of cancellation of registration in Form GST REG-21 on portal on 01.08.2019. According to the petitioner, he had not been responded to on numerous occasions yet requested the respondent for time. When the restriction was released in post COVID period, he again made a request to the respondent to either accept or reject the application. When no actions had been taken by the respondent for about one and a half years, he had also raised the grievance for the revocation of registration on Centralized Public Grievance Redress and Monitoring System (CPGRAM).
When emphasized that he had no intention to defraud the authority or make any suppression of facts, the petitioner, on 06.08.2019 on the charge of fake purchases is prosecuted, however, no charge-sheet till date has been filed and no show-cause notice has been issued by the department till date. Even liability has not been conveyed by the DGGI. Petitioner, also has not received any response from respondent till 24.11.2021 and therefore, he preferred Special Civil Application No.4422 of 2021.
On issuance of the notice, the affidavit-in-reply is filed by respondent No.1, reiterating the allegations and urging this Court that for quashing of the order dated 26.07.2019 cancelling the registration under the GGST Act and for rejection of the revocation of cancellation dated 05.01.2022. There are alternative and efficacious remedies provided. No order of rejection of revocation of cancelled registration was subjective in nature and it had been rejected considering the amount of transactions and also the parties from which the bogus billing transactions were entered into by the petitioner. It is also submitted that the application of the petitioner for revocation was approved because of the technical glitch in the portal. It was on the basis of details furnished that the Additional Tax Commissioner, Surat approved the application and a fresh show cause notice for cancellation on account of bogus billing transaction was issued. There are 107 firms involved in bogus billing transactions investigated by the Director General of Intelligence and a detailed report was supplied. The statement of the petitioner and his brother has been taken by the concerned authority on 10.04.2019 and 06.08.2019, where there are admissions which have come in relation to the bogus billing transactions.
It is further contended that the petitioner has not provided documents in consonance with the grievance raised by the petitioner and he is not found at the principal place of business. A detailed order of 05.01.2022 was passed after providing an opportunity of being heard.
It is further the say that the petitioner had utilized 99.55% of ITC in paying the tax liability over the turn over as uploaded on portal for financial years 2017-18, 2018-19 and 2019-20. Since he failed to pay the tax liability as required in accordance with the law and further failed to produce any document to sustain registration under GST, the same has led to cancellation and further rejection of revocation.
Observation of the court
We have heard learned advocate Mr.Hardik Vora for the petitioner and learned AGP Mr.Trupesh Kathiriya for the respondent State.
It is not in dispute from the record that in earlier petition – Special Civil Application No.4422 of 2021, the prayers sought for by the petitioner was to quash the order dated 26.07.2019 issued by the respondent for cancellation of registration under the GST Act. This Court had noticed that no procedure had been followed by the proper officer and had not chosen to issue any notice to show cause indicating his intention of rejection. Certain statutory rules, which provided the prescribed limit, were disregarded and therefore, this Court had acceded to the request of hearing the matter from the stage where it was left by giving the timeline for those stages is to be completed.
It appears that pursuant to this order dated 24.11.2021, we noticed that on 13.12.2021, a letter is addressed to the Commercial Tax Officer seeking the revocation of cancellation of pending matter, where it is urged that without following the due procedure prescribed under the CGST Rules, the application for revocation is in the Form of GST REG-21 and GST portal has been preferred. It is also further urged that the Court had passed an order for ready reference, the application for revocation due to unknown reasons is yet to be decided, the directions of the Court have been sent. On 16.12.2021, he had been requested to furnish the documentary evidences. Yet another application of 27.12.2007 has been given, where also he has taken a stand that there is no show cause notice giving the details. He has no idea as to how they have alleged of the fraud or misrepresentation, the authority concerned for want of necessary documents and also on the ground that this is a case where investigating agency has already noticed. The bogus billing in case of the present petitioner and others, has already denied the cancellation of registration.
None of the findings and observations in any manner shall prejudice the rights of either side in pursuing the respective stands before the authority concerned. 7. The respondent shall be at liberty to initiate the action by giving a detail fresh show-cause notice within two (02) weeks from the receipt of copy of this order. Direct service is permitted.
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
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