Vageesh Umesh Jaiswal Vs State of Gujarat (Gujarat High Court)
The whole object of issuing a show-cause notice is to make the recipient of the notice understand what the authority is trying to convey and what are the nature of the allegations. In the case on hand, when there are allegations of bogus billing, it was expected of the authority to at least furnish some information about such bogus billing. At this stage, Mr. Sharma submitted that along with the show-cause notice, there is always few documents attached which would indicate what the authority wants to convey about the bogus billing. It has been stated on oath not only in the memorandum of the writ application but even in the reply to the show-cause notice that except the show-cause notice, nothing else was furnished or nothing was attached to such show-cause notice.
A show cause notice has great significance in the adjudication proceedings for the mandatory compliance of the principles of natural justice . Show cause notice is a mandatory requirement for raising any demand under the Act, 2017 except payment of interest u/s 50 and assessment of non filer of returns u/s 62 of the act. The SCN is the foundation on which the adjudicating authority has to build up its case. It is the document served on the taxable person asking him to explain with reason as to why a particular course of action should not be taken against him. It must be a speaking and well reasoned document. The issue of SCN is not only to make aware the taxable person against whom the action is intended to be taken but must contain brief facts of case and grounds relied upon for the proposed action and language in precision, the reading of which makes the person concerned understand the case that he has to defend. It should not be issued on assumptions and presumptions. The allegations and findings in the SCN should be supported by some documentary evidences.
Input tax credit cannot be blocked under Rule 86A of GST Rules for more than a Year
At this stage Mr. Joshi pointed out that the input tax credit was also blocked in exercise of the powers under Rule 86A of the Rules. Let us assume for the moment that at the relevant point of time, the authority was justified, but the order has outlived its statutory life period of one year. In such circumstances, the blocking of the input tax credit also comes to an end.
GST registration cancellation for Alleged Bogus billing without providing any evidence/Supporting for the same to Taxpayer is invalid
In the result, this writ application succeeds and is hereby allowed. The impugned order, cancelling the registration is hereby quashed and set aside. As we have quashed and set aside the order, cancelling the registration on the ground of vague show-cause notice bereft of any material particulars, we leave it open to the authority to issue a fresh show-cause notice, if it intends to, but such fresh show-cause notice should contain all the necessary details and information about the alleged bogus billing to enable the assessee to file an effective reply to the same.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs;
“(a) That this Hon’ble Court be pleased to issue a writ of mandamus or any other appropriate writ, direction or order quashing and setting aside the impugned order dated 15.11.2021 (Annexure-A) passed by the Respondent No.2 and
(b) That this Hon’ble Court be pleased to issue a writ of mandamus or any other appropriate writ, direction or order quashing and setting aside the notice dated 11.10.2021 (Annexure-E) issued by the Respondent No.2, and
(c) That this Hon’ble Court be pleased to issue a Writ of mandamus or any other appropriate writ, direction or order quashing and setting aside the action of blocking of input tax credit (Annexure-B) by the Respondents;and
(d) This Hon’ble Court be pleased to issue writ of mandamus or any other appropriate writ, direction or order directing the Respondents to unblock/release the input tax credit, and
(e) Pending notice, admission and final disposal of this petition, this Hon’ble Court by way of interim relief be pleased to direct the respondent authorities to restore the registration of the petitioner with effect from 01.07.2017 and to unblock/release the input tax credit of Rs.32,75,288/-; and
(f) Pending notice, admission and final disposal of this petition, this Hon’ble Court by way of interim relief stay the recovery and any other coercive action in pursuance of the impugned order dated 15.11.2021 (Annexure-A) passed by the Respondent No.2; and
(g) Ex-parte ad-interim relief in terms of Prayer-9(e) and 9(f) be granted; and
(h) for costs; and
(I) That this Hon’ble Court be pleased to grant such other and further relief/s as are deemed just and proper in the facts and circumstances of this case.”
2. The facts, giving rise to this writ application, may be summarized as under;
2.1 The writ applicant is a proprietor of a proprietary firm running in the name of M/s. All Metals and is engaged in the business of trading of aluminum round bars, steel tubes, pipes etc. The proprietary firm is registered under the Gujarat Value Added Tax Act, 2003. On 17th March, 2021, the premises of the writ applicant was searched by the Asst. Commissioner of DGGI (Directorate General of Goods & Services Tax Intelligence), Ahmedabad. In the course of the search, the officer seized various documents like purchase invoices, ledger copies etc. It appears that, thereafter, the respondent No.2 issued a show-cause notice in the Form GSTREG-17/31 [Rule 22(1)] of the Rules, which reads thus;
“Reference Number:ZA241021046852Z
Date:11.10.2021
To,
Registration Number (GSTIN/Unique
ID):24AHZPJ6810B/ZD
Vageesh Jaiswal
B-2, Puspak Estate, Gujarat Bottling Road, Rakhial,
Ahmedabad, Gujarat, 380023.
Show cause notice for Cancellation of Registration
Whereas on the basis of information which has come to my notice, It appears that your registration is liable to be cancelled for the following reasons;
1. Issue any invoice or bill without supply of goods and/or service in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax.
You are hereby directed to furnish a reply to the notice within seven working days from the date of service of this notice.
You are hereby directed to appear before the undersigned on 18.10.2021 at 11:00
if you fail to furnish a reply within the stipulated date or fail to appear for personal hearing on the appointed date and time, the case will be decided ex parte on the basis of available records and on merits.
Please note that your registration stands suspended with effect from 11.10.2021.
Place: Gujarat
Date: 11.10.2021.
Nanjibhai Keshabhai Prajapati
Commercial Tax Officer
Ghatak 19 (Ahmedabad): Range-5,
Division-2:Gujarat”
2.2 To the aforesaid show-cause notice, the writ applicant filed its reply dated 18th October, 2021, which reads thus;
“To,
Commercial Tax Officer,
Ghatak 19 (Ahmedabad): Range-5: Division-2 Gujarat
Respected Sir,
Subject: Reply to Show Cause Notice for Cancellation of Registration in case of ALL Metals (Proprietor: VAGEESH JAISWAL), GSTN :24AHZPJ6810BIZD
Ref: Notice Reference Number: ZA241021046852Z dated 11-10-2021
As per the notice issued to us having following reason for the cancellation “Issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax.”
We have been doing the business of supplying the steel on actual delivery terms only and we have not been involved in the issuance of any invoice or bill without supply of goods and or service. We need additional time of 10 days to submit the documentary evidence for delivery of goods since I was in Mumbai due to medical emergency of my sister (Attached herewith report of medical) and then traveled to Kolkata and returned to Ahmadabad as on 17-10-2021 at late night evening (Attached herewith travel tickets).
At outset I also mention the fact that my total credit of Rs. 32,75,288/- was already blocked for which no order was received to me for blocking the credit for the F.Y 2018-19.
I urge to share with me show cause notice has been issued based on which supplier name and GSTN who involved in Issues any invoice or bill without supply of goods and/or services, if any or base for issuing this show cause notice so that I can substantiate the reply in detailed and also, notice was issued for which period to substantiate the claim of proof of delivery of goods by sales made by us.
I also urge that my number has been suspended without providing the base and information pertaining to which year hence; I request to activate my number as suspension of the number leads to hardship for deliver the goods as on date and affecting to my business transaction.
We shall be glad to furnish further information or explanation, if any.
For,
All Metals
Vageesh Jaiswal,
(Proprietor)
Enclosure:-
01. Medical report of my sister;
02. My travel tickets from Ahmedabad to Mumbai with my spouse and Travel ticket from Mumbai to Kolkata and Kolkata to Ahmedabad.”
2.3 In the reply to the show-cause notice, the writ applicant brought to the notice of the Commercial Tax Officer that the show-cause notice was as vague as anything as no details of the name of the supplier etc. had been furnished.
2.4 The Commercial Tax Officer proceeded to pass the final order, cancelling the registration in the form GSTREG-19 dated 15th November, 2021. The same reads thus;
“FORM GST REG-19
[See Rule 22(3)]
Reference Number:ZA241121046467U
To,
Vageesh Jaiswal,
B-2, Puspak Estate, Gujarat Bottling Road, Rakhial,
Ahmedabad, Gujarat, 380023.
GSTIN/UIN:24AHZPJ6810BIZD
Application Reference No.(ARN):AA241021032559M
Order for Cancellation of Registration
This has reference to your reply dated 18.10.2021 in response to the notice to show cause dated 11.10.2021
Whereas the undersigned has examined your reply and submission made at the time of hearing and is of the opinion that your registration is liable to be cancelled for following reason(s);
