24 Jun 2023 7:00 AM GMT
The Gujarat High Court has quashed an order cancelling the Goods and Services Tax (GST) registration of Sona Metals, citing a lack of detailed reasons for the cancellation. The petitioner, registered under the Gujarat Goods & Service Tax Act, challenged the cancellation order on the grounds that the show cause notice issued by the respondent was vague and did not provide...
The Gujarat High Court has quashed an order cancelling the Goods and Services Tax (GST) registration of Sona Metals, citing a lack of detailed reasons for the cancellation.
The petitioner, registered under the Gujarat Goods & Service Tax Act, challenged the cancellation order on the grounds that the show cause notice issued by the respondent was vague and did not provide sufficient information.
The respondent had issued a show cause notice in Form GST REG-17/31, which was uploaded on the department's portal. This notice, issued under Section 29 of the GST Act read with Rule 22(1) of the GST Rules, 2017, was not physically received by the petitioner at their registered place of business.
The notice vaguely mentioned that the registration could be cancelled if obtained through fraudulent means or intentional misstatement or suppression of facts.
Subsequently, the Assistant Commissioner, Ghatak, issued an order canceling the registration of the petitioner through Form GST REG-19, uploaded on the department's portal. Although the cancellation was based on the show cause notice, the petitioner claimed not to have received any such notice, as mentioned in the order. Therefore, the petitioner filed a petition challenging the cancellation.
Advocate MG Nanavati, representing the petitioner, argued that the show cause notice was vague and did not specify any particular facts, making it impossible for the petitioner to provide a suitable response. He further contended that the cancellation order, passed by the Assistant Commissioner, failed to provide any reasons for the cancellation apart from citing the relevant provision of the law.
Referring to a similar case, Aggrawal Dyeing and Printing Works Vs. State of Gujarat & Ors. (Special Civil Application No.18860/2021), Nanavati highlighted that the court had previously quashed and set aside a show cause notice issued by the concerned respondent authority.
On the other hand, AGP Pranav Trivedi, representing the respondent, contended that the notice was indeed issued to the petitioner, containing necessary details to enable a response. However, upon verifying the original file, Trivedi admitted that the notice had not been sent through Registered Post with Acknowledgment Due (RPAD). Instead, it was personally affixed to the closed premises of the petitioner's registered office.
Trivedi argued that once an order was passed by the respondent authority under Section 29 of the GST Act, the petitioner could challenge it by filing an appeal under Section 107 of the GST Act, thereby providing an opportunity to present all contentions before the appellate authority. Therefore, Trivedi urged the Court not to entertain the present petition.
Upon careful consideration, the division bench of Justices Vipul M Pancholi and DM Desai opined that the show cause notice issued by the respondent to the petitioner was "very vague and cryptic" making it difficult for the petitioner to respond adequately.
Regarding the respondent's claim of prior notice, the bench noted that although specific details were supposed to be provided to the petitioner, it was undisputed that the show cause notice had not been received by the petitioner.
The division bench stated, “We are of the view that in both the aforesaid orders, the concerned respondent has failed to provide specific reasons for cancellation of registration under Section 29(2) of the GST Act.”
Consequently, the bench quashed and set aside both the show cause notice and the cancellation order, and the petition was allowed.
The bench granted the respondent authorities the liberty to issue a fresh notice that includes detailed reasons, followed by a reasonable opportunity of hearing for the petitioner.
The authorities were directed to restore the petitioner's registration promptly. The bench clarified that the petitioner could respond to the notice by filing objections or replies, accompanied by necessary documents if relied upon.
Case Title: Sona Metals Versus State Of Gujarat R/Special Civil Application No. 25221 Of 2022
Case Citation: 2023 Livelaw (Guj) 105
Mr Mg Nanavatiy For Nanavati & Co.(7105) For The Petitioner(S) No. 1
Mr Pranav Trivedi Agp For The Respondent(S) No. 1-3
Click Here To Read/Download Order