Pantone Enterprises Private Limited Vs Union of India (Gujarat High Court)
Having examined the show cause notices as well as the orders impugned in this batch of writ applications, we notice that the show cause notice issued by the respondent authority is bereft of any material particulars. Not only that, no sufficient opportunity has been provided by the respondent authority while adjudicating such show cause notice. We could not overlook the fact that all the show cause notices seeking cancellation of registration in this batch of writ applications are issued during the surge of Covid-19 pandemic i.e. in the month of March, 2021. The reply was placed on record by the writ applicant specifically requesting for personal hearing through video conferencing. In fact in the reply, the attention of the respondent authorities has been drawn to the fact that no reason or details have been furnished to respond to such show cause notice. Even the order impugned lacks the reasons. Even otherwise, the reason assigned by the respondent authority is without any basis being found in the show cause notice. Even in the show cause notice, seeking revocation of cancellation of registration, the authorities have choose to proceed on the ground other than the reason given in the original show cause notice seeking cancellation of registration. At the stage of rejection of application for revocation, the respondent authorities have failed to adhere to the basic principles of natural justice. We could further notice that the appellate authority has recorded the reasons and the findings in mechanical manner as in almost all these matters the reasons assigned and findings recorded are same, the appellate authority has failed to address to the issue of various grounds raised by the writ applicants more particularly, as regards the opportunity of personal hearing and the instructions issued by the CBIT being not adhere to more particularly, during the period of pandemic. We could further notice that the core reason considered by the respondent appellate authority while rejecting the appeal is the aspect of fake Input Tax Credit availed by the writ applicants. It appears from the reasons and findings recorded by the appellate authority that reliance is placed on the report dated 22.12.2021 submitted by the Joint Commissioner, CGST, Gandhinagar, having informed that the said tax payers did not hold any ground for revocation of cancellation of registration.
At this stage, it would be appropriate to refer to the decision rendered by this Court in the case of Aggarwal Dyeing and Printing Works Vs. State of Gujarat and Ors., Special Civil Application No.18860 of 2021 and allied matters, decided on 24.02.2022. In the aforesaid batch of writ applications, the show cause notices seeking cancellation of registration of dealers so issued lack material particulars and this Court further found that final orders of cancellation of registration so passed were bereft of any reasons. This Court allowed the aforesaid writ applications solely on the ground of violation of principles of natural justice and had further quashed and set aside the consequential final orders cancelling the registration with a liberty to the respondent authority to issue fresh Notice with particulars of reasons incorporated with details and thereafter to provide reasonable opportunity of hearing and to pass speaking orders on merits. This Court had also directed the respondent authorities to cure the technical glitches and to issue a show cause notice in physical form containing all material particulars and information in order to enable the dealer to effectively respond to such show cause notice. The Court also permitted dispatch of show cause notice as well as final order in physical form by way of RPAD.
In light of the observations made by this Court in the case of Aggarwal Dyeing and Printing Works (Supra), the present writ applications succeed. The impugned show cause notices as well as the consequential orders cancelling registration and further order rejecting the revocation application seeking restoration of GSTN registration are hereby quashed and set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Since this batch of writ applications involve similar facts and raises common questions of law, all those were taken up for hearing analogously and are being disposed of by this common order. We treat Special Civil Application No.6650 of 2022 as the lead matter.
2. By way of this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs:
“(a) Your Lordships be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner’s case and after going into the validity and legality thereof to quash and set aside (i) order for cancellation of registration dated 17.03.2021 passed by Respondent No.4; (ii) impugned order dared 27.04.2021 passed by the Respondent No.3; and (iii) impugned order dated 02.03.2022 passed by Respondent No.2.
(b) Your Lordships be pleased to issue a writ of Mandamus or any other appropriate writ in the nature of Mandamus ordering and directing the Respondents to forthwith withdraw restore the registration of teh Petitioner under CGST Act;
(c) That pending the hearing and final disposal of the above Petition, this Hon’ble Court be pleased to direct the Respondents by an interim order and injunction of this Hon’ble Court to forthwith make the GSTN registration No.24AAICA0476H1ZU operative provisionally and permit the Petitioner to file its GST returns from March 2021 onwards, on such terms and conditions as may deem fit to this Hon’ble Court;
(d) An ex-parte ad-interim relief in terms of prayer (d) above may kindly be granted;
(e) Such other and further order or orders as may be deemed just and proper in the facts and circumstances of the present case may kindly be granted.”
3. Thus, essentially, the writ applicants have challenged the legality and validity of the orders passed by the respondents Nos.2 to 4 purporting to cancel the registration granted to the writ applicant under the Central Goods and Services Tax Act, 2017 (for short ‘the CGST Act, 2017).
4. The brief facts of Special Civil Application No.6650 of 2022 are summarized as under:
4.1 The writ applicant is a registered company incorporated under the Companies Act, 1956 and is engaged in the trading of various agriculture products such as Castor Seeds, Jeera, Chana, Coriander, R.M. Seeds, Turmeric, Cotton Oil Cake (Kapas Khali) etc. and is also engaged in trading of Bullion derivatives on multi stock commodity exchange. The writ applicant claims to have requisite registration number under the relevant provisions of the different Acts. On implementation of the Goods and Services Tax Act, 2017, the writ applicant had applied for migrating its registration issued under the GVAT Act to CGST Act vide application dated 21.03.2017. Necessary documents along with the said application were furnished before the respondent authorities.
4.2 Initially, the writ applicant was granted provisional registration certificate on 25.06.2017 under the CGST, 2017. The final registration certificate bearing GSTN registration No.24AAICA0476H1ZU was granted with effect from 01.07.2017. Photo copy of the said certificate of the final registration is placed on record. The writ applicant claims to have regularly filed its return as required under the GST Act since July, 2017 and claims to have discharge all its liability under the law.
4.3 Inspite of the aforesaid fact, the writ applicant was served with show cause notice dated 07.03.2021 in Form GST REG-17/31 in exercise of power conferred under Section 29(2) (e) of the CGST Act, 2017 read with Rule 21 of the Central Goods and Service Rules, 2017 (for short ‘the CGST Rules, 2017’). Even the registration of the writ applicant was suspended with effect from 07.03.2021. The contents of the said show cause notice reads as under:
“Form GST REG-17/31
[See Rule 22(1)/sub-rule (2A) of rule 21A]
Reference Number: ZA240321120401I
Date: 07/03/2021
To
ABANS COMMODITIES(I) PRIVATE LIMITED
439/2,1, Sankdi Sheri, Near Khetarpal Ni Pole, Manek Chawk,
Ahmedabad, Gujarat,380001
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 In case, Registration has been obtained by means of fraud, wilful misstatement or suppression of facts.
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 13/03/2021 at 01.55 AM.
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 07/03/2021
Place: Gujarat
Date: 07/03/2021
Chandrakant Chhaganlal Solanki
Superintendent
Ghatak-34 (Pal): Range – 8: Division -4: Gujarat”
4.4 The writ applicant had submitted its reply on 12.03.2021 thereby drawing attention of the respondent No.2 that the Notice does not spell out any reasons or basis, on the strength of which the Proper Officer had reason to believe that the registration was liable for cancellation. The writ applicant submitted that such action of suspension of registration of the writ applicant has completely halted the business activities and thereby prayed to revoke the suspension and withdraw the show cause notice.
4.5 However, the respondent authority without considering the aforesaid reply dated 12.03.2021, proceeded to pass the order for cancellation of registration on 17.03.2021. The said order reads as under:
“Reference Number : ZA2403211604060 Date: 17/03/2021
To
ABANS COMMODITIES (I) PRIVATE LIMITED
439/2,1,Sankdi Sheri,Near Khetarpal Ni Pole,Manek
Chawk,Ahmedabad,Gujarat, 380001
GSTNIN/UIN : 24AAICA0476H1ZU
Application Reference No.(ARN) : AA240321024385Q
Dated : 07/03/2021
Order for Cancellation of Registration
This has reference to your reply dated 13/03/2021 in response to the notice to show cause dated 07/03/2021
Whereas the undersigned has examined your reply and submissions made at the time of hearing, and is of the opinion that your registration is liable to be cancelled for following reason(s).
1. SINCE, THIS OFFICE HAS BEEN RECEIVED INSTRUCTIONS FROM PREVENTIVE SECTION HEADQUARTER, GANDHINAGAR COMMISSIONERATE THAT YOUR COMPANY IS VIOLATING THE PROVISIONS OF SECTION 29(2)(e) OF CGST ACT, 2017 READ WITH RULES 21 OF CGST RULES, 2017.
RULE 21 OF CGST RULES, 2017 PROVIDES THAT, THE REGISTRATION GRANTED TO A PERSON IS LIABLE TO BE CANCELLED, IF THE SAID PERSON, HAS VIOLATED THE PROVISIONS OF GST ACT, 2017, IN THIS CASE THE TAX PAYER HAS VIOLATED THE PROVISIONS OF THE SECTION 29(2)(e) OF CGST ACT, 2017 IN AS MUCH AS THEY HAVE OBTAINED REGISTRATION ON THE BASIS OF DOCUMENTS OF OTHER PERSONS.
SECTION 29(2)(e) OF CGST ACT, 2017 PROVIDES THAT REGISTRATION HAS BEEN OBTAINED BY MEANS OF FRAUD, WILFUL MISSTATEMENT OR SUPPRESSION OF FACTS
AS YOUR FIRMS HAS VIOLATED THE PROVISIONS OF THE ABOVE SAID ACT AND RULES, YOUR REGISTRATION IS HEREBY CANCELLED.
The effective date of cancellation of your registration is 01/02/2021
Determination of amount payable pursuant to cancellation:
Accordingly, the amount payable by you and the computation and basis thereof is as follows:
The amounts determined as being payable above are without prejudice to any amount that may be found to be payable you on submission of final return furnished by you.
You are required to pay the following amounts on or before failing which the amount will be recovered in accordance with the provisions of the Act and rules made thereunder.
