Cancellation Of GST Registration Ultimately Impacts Recovery Of Taxes: Calcutta High Court

The division bench of Justice T.S. Sivagnanam and Justice Prasenjit Biswas has held that the suspension of the appellant's registration should be revoked forthwith with a direction to the appropriate authority to issue a show cause notice within a time frame and take up the adjudication proceeding.

The appellant/assessee had filed the writ petition challenging a show cause notice for cancellation of registration granted to the appellant. The primary ground on which the show cause notice was challenged is that there is no final order of adjudication passed by the competent authority quantifying the tax liability payable by the appellant. Consequently, the basis to cancel the registration on the alleged ground of failure to pay tax and penalty would not arise.

In the stay application, a bunch of documents have been annexed which show that from January 10, 2020, the Anti-Evasion Wing and the Audit Department repeated summons have been issued by the authorities on various dates.

The appellant contended that till date, no show cause notice has been issued to the appellant either by the Anti-Evasion Wing or the Audit Department of the respondent department. If that is so, the liability has yet to be quantified. Quantification of liability arises after the issuance of show cause notice and following the process of adjudication.

The appellant contended that it was not clear as to why the department had been prolonging the matter for such a long period without taking the issue to its logical end. The matter can attain finality if a show cause notice is issued by the appropriate authority and adjudication is carried out by the competent authority.

"In our view, suspension of a licence of a dealer will be counter-productive and would work against the interest of the revenue," the court said.

The court found that summons were repeatedly issued to the appellant and that the appellant had been responding to the summons by submitting representations to the department. It was not clear as to why the authorities did not proceed further pursuant to the summons.

The court directed the department to give reasonable time to the appellant to submit his objection to the show cause notice. Thereafter, the show cause notice shall be adjudicated and a reasoned order shall be passed on the merits and in accordance with the law.

Case Title: Bisweswar Midhya, Proprietor of Midhya Construction Versus The Superintendent, CGST

Citation:2022 LiveLaw (Cal) 305

Case No: MAT 1376 of 2022 with IA No. CAN 1 of 2022

Date: 01.09.2022

Counsel For Appellant: Advocates Ankit Kanodia, Megha Agarwal, Jitesh Sah

Counsel For Respondent: Advocates Bhaskar Prasad Banerjee, Rajarshree Venkat Kundalia, Ekta Sinha, Tapan Bhanja

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