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GST Department to pay Rs. 50,000 cost to taxpayer for cancellation of his GST Registration: High Court orders in a latest ruling

Petitioner:

Petitioner's GST Registration was cancelled on the following ground.

"Taxpayer found Non-functioning/Not Existing at the Principal Place of Business"

Even Petitioner's request for seeking 15 days adjournment to file his reply in view of the marriage of the daughter of the petitioner scheduled on 24.06.2020 was not considered and registration was cancelled by GST Authorities. The appeal of petitioner was also dismissed by the GST Authorities without giving proper reasons.

Revenue:

Learned Standing Counsel on the other hand justifies the order on the ground that on an investigation being carried out on 20.03.2020 by a committee at the main place of business of the firm neither any business activity was found nor any stock of goods or any employee was found and on the contrary, the unit of another firm was found working on the same declared business site. No books of account were available at the time of investigation at the place of business. It is further argued that when the partner of the firm was trying to be contacted on telephone, he did not co-operate in the investigation and despite notice, no books of account/entries were produced before the Investigating Officer. He further argues that the petitioner did not even submit a reply to the show-cause notice and thus, justifies the impugned order and states that the petition is liable to be dismissed.

Learned counsel appearing for respondent argues that on the date of investigation, no goods were found and accordingly, the registration was cancelled and it appears that after the cancellation of the registration, some goods might have been placed by the petitioner at the place. He argues that in terms of the show-cause notice issued by the DGGI, on 03.12.2020 a search was carried out and a panchnama of the goods were prepared, which indicated various goods as were seized in terms of the said panchnama, to this he argues that after the cancellation of the registration, the petitioner might have kept the goods there.

Held by High Court:

A perusal of the show-cause notice at the first instance, clearly depicts the opaqueness of the allegations levelled against the petitioner, which were only to the ground that ''tax payer found non-functioning/non-existing at the principal place of business'. The said show-cause notice did not propose to rely upon any report or any inquiry conducted to form the opinion and on what basis was the allegation levelled that the tax payer was found non-functioning; it does not indicate as to when the inspection was carried. A vague show-cause notice without any allegation or proposed evidence against the petitioner, clearly is violative of principles of administrative justice.

Cancellation of registration is a serious consequence affecting the fundamental rights of carrying business and in a casual manner in which the show-cause notice has been issued clearly demonstrates the need for the State to give the quasi-adjudicatory function to persons who have judicially trained mind, which on the face of it absent in the present case.

The order of cancellation of the registration on the ground that no reply was given is equally lacking in terms of a quasi-judicial fervor as the same does not contain any reasoning whatsoever. The.......
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Cancellation of GST Registration

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Author:

TaxReply


Aug 17, 2022

Comments


Very nice .
By: Sanjeev Gupta | Dt: Aug 18, 2022


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