Sky Associates Vs State of U.P. and Another (Allahabad High Court)
Allahabad High Court recently addressed the case of Sky Associates vs. State of Uttar Pradesh regarding the cancellation of the petitioner’s GST registration. The petitioner, registered under the Goods and Services Tax Act, 2017 (GST Act) under the Composition Scheme, challenged the order passed on March 15, 2024, which canceled its GST registration. The cancellation was based on the petitioner’s failure to file returns for six consecutive months. However, the petitioner argued that, as a Composition Scheme taxpayer, they were required to file only one quarterly return (GSTR 4) and one annual return (GSTR 9A), not monthly returns as applicable to regular taxpayers. The petitioner also claimed that the show cause notice sent to them did not accurately reflect the provisions applicable to them under the GST Act.
The court found that the show cause notice and the cancellation order were issued under a misunderstanding of the petitioner’s status as a taxpayer under Section 10 of the GST Act, which pertains to the Composition Scheme. The order cited provisions under Section 29(2)(c), which did not apply to the petitioner, leading to the conclusion that the order was non-speaking and showed a lack of application of mind. The court ruled that the cancellation order was issued under incorrect grounds, as the petitioner should have been treated according to Section 29(2)(b) related to the Composition Scheme. Consequently, the court quashed the cancellation order and directed the authorities to issue a fresh show cause notice. The petitioner was instructed to appear before the authority and raise all relevant points, including the correct application of Section 10 of the GST Act, for reconsideration.
