Case Law Details
Ahmed Enterprises Through Proprietor Tausif Ahmed Niazi Vs Union of India & Ors. (Bombay High Court)
In a significant development, the Bombay High Court recently addressed a petition filed by Ahmed Enterprises challenging the cancellation of its GST registration. The court, through an exhaustive judgment, quashed the cancellation order, citing procedural irregularities and lack of reasons in the show cause notice.
1. Grounds for Challenge
The petitioner, Ahmed Enterprises, raised several crucial points challenging the cancellation of its GST registration. Primarily, the show cause notice dated 14th October 2022 lacked specific reasons for the proposed cancellation, violating principles of natural justice.
2. Procedural Irregularities
The court noted that the order dated 1st November 2022, canceling the petitioner’s registration, referred to a reply dated 20th October 2022. However, the petitioner contended that no reply was filed to the show cause notice. The court found this discrepancy and lack of reasoning as serious flaws.
3. Appellate Proceedings
Despite the petitioner filing an appeal online on 15th February 2023, the Appellate Authority rejected it, citing a supposed delay in filing. The petitioner contested this, arguing that the appeal was timely filed, raising concerns about procedural fairness.
4. Legal Precedent
The petitioner relied on previous judgments, including cases like Monit Trading Company Limited vs. Union of India and Makersburry India Pvt. Ltd. vs. State of Maharashtra, where similar show cause notices were set aside due to lack of reasons.
Conclusion:
In light of the discrepancies and procedural irregularities, the Bombay High Court allowed the petition, setting aside both the show cause notice and the cancellation order. The court directed the respondents to issue a fresh show cause notice within three weeks, emphasizing adherence to legal procedures. The restoration of the petitioner’s GST registration was ordered, subject to potential suspension pending a fresh order by the tax authorities.
This judgment underscores the importance of due process and adherence to legal norms in tax-related proceedings. It serves as a reminder that clear communication and procedural fairness are integral aspects of administrative actions, preventing unjust hardships on businesses.
This decision adds to the evolving jurisprudence surrounding GST matters and administrative actions, setting a precedent for cases with similar procedural lapses. Businesses facing similar situations can find guidance in the court’s emphasis on principles of natural justice and lawful procedures.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. This petition under Article 226 of the Constitution of India is filed praying for the following reliefs :
“(a) issue an appropriate writ, order, or direction, setting aside the Impugned SCN dated 14.10.2022 and Impugned Order dated 01.11.2022 passed by Respondent No 2 and directing restoration of Petitioner’s GST registration; or
(b) issue an appropriate writ, order, or direction, setting aside the Impugned Order and remanding the matter back to Respondent No. 2 for de novo adjudication in a time bound manner after following principles of natural justice; or
(c) issue an appropriate writ, order, or direction, setting aside the Impugned Appeal Order dated 23.08.2023 passed by Respondent No. 4 and directing restoration of Petitioner’s GST registration; or
(d) issue an appropriate writ, order, or direction, setting aside the Impugned Appeal Order dated 23.08.2023 and remanding the matter back to Respondent No. 4 for de novo adjudication on merits in a time bound manner after following principles of natural justice; or
(e) issue an appropriate writ, order, or direction, directing Respondent No. 3 to decide the Petitioner’s Revocation Application dated 20.12.2022 on merits, in a time-bound manner after following principles of natural justice;
(f) issue an appropriate writ, order, or direction, directing restoration of Petitioner’s GST registration, enabling it to restart normal business activities, pending disposal of this writ petition; and/or”
(g) grant ex-parte ad-interim relief in terms of prayer clause (f); and/or
(h) grant any such other and further relief(s) that this Hon’ble Court may deem necessary, fit, and proper in the interest of full and complete justice.
2. At the outset, our attention has been drawn by the learned counsel for the petitioner to the impugned show cause notice dated 14th October 2022 to submit that no reasons whatsoever has been set-out in the show cause notice. The relevant extract of the show cause notice reads thus :
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 01/11/2022 at 03.00 PM
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 14/10/2022.
3. The show cause notice for cancellation of registration was not received by the petitioner, as the petitioner was not in Mumbai. Eventually an order dated 1st November 2022 came to be passed by the designated officer by which, the registration of the petitioner was cancelled.
4. It is quite surprising to note that the order of cancellation refers to reply dated 20th October 2022 filed by the petitioner, when no reply was filed to the show cause notice dated 14th October 2022. An averment to that effect is found at para 11 of the petition. However, without any reasons as set-out in such order, cancelling the petitioner’s registration, the officer has proceeded to cancel the petitioner’s registration. The petitioner being aggrieved by the order dated 1st November 2022 for cancelling the registration approached the Appellate Authority under Section 107 of the CGST Act. The appeal has been rejected by the impugned order dated 23rd August 2023 on the ground that the appeal was filed beyond the prescribed period of limitation as provided under Section 107(4) of the CGST Act. The case of the petitioner is that, the appeal was filed online on 15th February 2023, and therefore, the reasons for that the appeal was filed on 13th March 2023 is not the correct position.
5. Be that as it may, learned counsel for the petitioner has submitted that the impugned show cause notice as also the order for cancelling registration is per se illegal. He submits that in a similar situation, the Division Bench of this Court in the case of Monit Trading Company Limited vs. Union of India & Ors.1, also in the case of Makersburry India Pvt. Ltd. vs. State of Maharashtra & Ors.2 as also in the case of Nirakar Ramchandra Pradhan vs. Union of India & Ors.3 , has set aside the show notices. It is, therefore, his submission that the prayers as made in the petition ought to be granted.
6. On the other hand, learned counsel for the respondents would oppose this petition. However, he would not dispute that the show cause notice does not furnish any reasons, as also the order cancelling registration of the petitioner does not set-out the correct facts, namely, no reply being filed by the petitioner, but still it was observed that the reply was filed on 28th October 2022. The respondent would however contend that in the facts of the case, the petitioner now ought to be permitted to pursue this appeal.
7. Having heard learned counsel for the parties and having perused the impugned order, we find much substance in the submission as urged on behalf of the petitioner. We may observe that in identical circumstances when similar show cause notice was issued without setting out any reasons, as also an order passed without application of mind, this Court had set aside the orders passed by the respondent in the decisions as relied on behalf of the petitioner and as noted by us hereinabove. The Court had quashed and set aside the show cause notices, however, remanding the proceedings for a fresh show cause notice to be issued in accordance with law by the designated officer
8. In the aforesaid circumstances, we have no manner of doubt that this petition would also be required to be disposed of in terms of what has been held by this Court in the decisions as noted above. The petition is accordingly allowed in terms of prayer clause (a), which reads thus;
“(a) issue an appropriate writ, order, or direction, setting aside the Impugned SCN dated 14.10.2022 and Impugned Order dated 01.11.2022 passed by Respondent No 2 and directing restoration of Petitioner’s GST registration; or
9. The respondents are directed to issue a fresh show cause notice in accordance with law within a period of three weeks from today. The petitioner shall file a reply to the show cause notice within two weeks after receipt of the show cause notice. The designated officer shall thereafter proceed to hear the petitioner and pass appropriate orders in accordance with law.
10. Needless to observe that as the order cancelling registration of the petitioner is quashed and set aside, status-quo ante is to be restored. Accordingly, the registration of the petitioner shall stand restored however subject to the authority of the Department to issue a fresh order in regard to the suspension of the petitioner’s registration as the law may permit.
11. All contentions of the parties are expressly kept open.
12. Writ Petition is disposed of in above terms. No costs.
1 2023 (7) TMI 911
2 2023 (10) TMI 792
3 2023 (9) TMI 1176
