Case Law Details
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.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. This writ petition is directed against order dated 15.3.2024 passed by the respondents whereby GST registration of the petitioner has been cancelled.
2. It is inter-alia indicated that petitioner is registered under the Goods and Service Tax Act, 2017 (‘Act, 2017’) having GSTIN No.09EZRPS4978B1Z1. A show cause notice was issued to the petitioner dated 6.2.2024 for cancellation of the registration on the common portal. The reason indicated in the notice was that the petitioner has not filed return for a continuous period of six months. It is claimed that notice was sent on the common portal, which the petitioner did not see, being unaware of the same and for lack of response, the impugned order dated 15.3.2024 ordering for cancellation of the registration was passed by the authority.
3. The petitioner became aware of the said aspect when it received the said information while dealing with the Railways wherein, it was indicated that its GST registration has been cancelled. The petitioner approached the respondents seeking revocation of the cancellation. However, the same has been refused.
4. Submission has been made that the petitioner is registered under the Composition Scheme and is required to file one quarterly return (GSTR 4) and one annual return (GSTR 9A), however, the show cause notice issued to the petitioner, pertained to non filing of return for a continuous period of six months, which is not applicable to the case of the petitioner. However, the order of cancellation indicated the status of the petitioner as person, other than paying tax under Section 10 having been failed to furnish returns for prescribed periods under Section 29(2)(c) of the Act, 2017, which provision also is not applicable to the case of the petitioner.
5. Submission has been made that the order passed besides being non speaking reflects non application of mind inasmuch as the purported failure of the petitioner to file return, in terms of Section 29(2)(c) of the Act, 2017 is not applicable.
6. It is submitted that the case of the petitioner, would be governed by provisions of Section 29(2)(b) of the Act, 2017, which pertains to a person paying tax under Section 10 of the Act, 2017.
7. It is further submitted that as the show cause notice and the order impugned passed by the respondents, have been issued under wrong impression by treating the petitioner as person other than covered under Section 10 of the Act, 2017, the same deserves to be quashed and set aside.
8. Learned counsel for the respondents made submissions that nowhere in the petition any averment pertaining to the status of the petitioner as registered under Section 10 of the Act, 2017 has been made. However, it is not denied that the order passed is non speaking.
9. In the circumstances of the case wherein, the claim made by the petitioner is that it is covered under Section 10 of the Act, 2017 and as such, issuance of notice itself is incorrect, and the order impugned dated 15.3.2024 ordering for cancellation of registration is non speaking, the same is quashed and set aside.
10. The matter is remanded back to the jurisdictional authority, the petitioner would appear before the said authority and file response to the show cause notice dated 6.2.2024 raising all pleas as sought to be raised in the present petition, including the fact that it is registered under the provisions of Section 10 of the Act, 2017.
11. On petitioner’s appearing before the authority, the authority shall hear the petitioner and pass a fresh order in accordance with law. The petitioner in the first instance shall appear before the authority on 24 December, 2024.
12. With the above directions, the petition stands disposed of.
Author Bio
