GST department cannot cancel registration of taxpayer on the ground that receptionist of the building could not recognise photograph of the owner of company: High Court

When an inspection was conducted by the officers of the department, the receptionist of the building affirmed that power of attorney agent of the owner, used to come to the premises and carried on certain business activities. Nevertheless, the said receptionist could not recognise the owner, whose photograph appears to have been shown to the said receptionist.

In any event, the authority while cancelling the registration could not have solely relied upon a statement made by the receptionist of the building and merely because she could not recognise owner’s photograph.

Facts:

The appellant was granted registration under the provisions of the VAT in 2013 and was migrated to GST in 2017.

In 2018, a show cause notice was issued to the appellant by the Deputy Commissioner of GST calling upon the appellant to show cause as to why the registration should not be cancelled as it has been obtained by means of fraud, wilful mistatement or suppression of facts. The appellant did not avail the remedy granted and did not appear before the authority and therefore, the registration was cancelled.

Thereafter, the appellant had filed an application for revocation of the cancellation of registration, which application was favourably considered and the registration was restored.

Thereafter, within a period of three days, another show cause notice was issued on the same ground as the earlier show cause notice. The appellant submitted the reply. However, the registration was cancelled expressing doubt on the documents produced by the appellant to show that he was carrying on business in the premises, which has been shown in the registration certificate.

Thereafter, the appellant filed an application for revocation of the said order, which was also dismissed after which an appeal was preferred before the Joint Commissioner, which was dismissed.

Held:

Admittedly, when an inspection was conducted by the officers of the department, the receptionist of the building affirmed that power of attorney agent of the owner, used to come to the premises and carried on certain business activities. Nevertheless, the said receptionist could not recognise the owner, whose photograph appears to have been shown to the said receptionist.

This report in the submission of the learned Advocate for the appellant is prima facie proved to show that the business was carried on in the said premises.

In any event, the authority while cancelling the registration could not have solely relied upon a statement made by the receptionist of the building and merely because she could not recognise owner’s photograph, could not have been the reason for cancellation.

The proper course that should have been adopted is to issue a notice directing the owner and his power of attorney agent to be personally present in the office of the revenue and the landlord of the premises also should have been summoned. If all the three parties are present, the correct facts will come to light. Had this procedure been adopted, the truth would have been established and a proper order could have been passed either way.

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