Suspension Of State Tax Officer For Delayed Report Unjustified When Authority Failed To Act In GST Fraud Case: Allahabad High Court

The Allahabad High Court has held that where loss is caused to the State, a State Tax Officer may not be suspended for mere delay in submitting a report. Justice Vikas Budhwar held that this would be especially impermissible in a case where the authority to act on the report in time chooses not to do so.He held that, despite the fact that the petitioner submitted the report with delay, the authority to take action was the Assistant Commissioner. It was held that the petitioner could not be suspended in a case where the appropriate authority chose not to cancel the GST registration of the firm in question.On 13.10.2024, a firm had placed an application for GST registration, which the petitioner was to process. The rules stipulated that post a lapse of three days in registration, the firm would be deemed to be registered. The petitioner submitted his report with a delay on 03.12.2024, stating that the firm in question was bogus. In this regard, a show-cause notice was issued to the firm on 05.12.2024. However, on 12.01.2025, the firm claimed ITC by means of which it was alleged that a sum of Rs. 3 Cr was defrauded from the State. Based on this, the petitioner was suspended from service. The petitioner relied on a circular dated 14.11.2018 to contend that in a case of deemed registration, the State Tax Officer may conduct an inquiry post such registration. It was submitted that such a report was to be uploaded on the common portal within a period of 15 days, with the permission of the Assistant Commissioner. It was argued that despite having submitted the adverse report against the firm with delay, the Assistant Commissioner had sufficient time to act on the report. However, the Assistant Commissioner only issued a show-cause notice and did not cancel the license. It was thus submitted that the liability in the present case could not be accorded to the petitioner. Justice Vikas Budhwar found merit in the argument of the petitioner. He held that despite the fact that the petitioner submitted the report with delay, the authority to take action was the Assistant Commissioner. It was held that the petitioner could not be suspended in a case where the appropriate authority chose not to cancel the GST registration of the firm in question. Accordingly, the suspension order was set aside and the petition was disposed of. However, it was observed that “Setting aside the suspension order dated 23.08.2025 would not preclude the respondents to conduct departmental inquiry and to conclude the same within a period of four months from the date of presentation of the certified copy of the order.”Case Title: Malikhan Singh v. State of U.P. And 4 Others [WRIT - A No. - 15409 of 2025]Click Here To Read/Download Order

Suspension Of State Tax Officer For Delayed Report Unjustified When Authority Failed To Act In GST Fraud Case: Allahabad High Court

Upasna Agrawal

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