A.M. Enterprises Vs State of Himachal Pradesh & Ors. (Himachal Pradesh High Court)
Himachal Pradesh High Court held that prima facie investigation cannot be basis of an order of cancellation of GST registration. Drastic penalty of cancellation of GST registration can be imposed only after completion of investigation.
Facts- In this Writ petition, the petitioner has assailed an order dt. 09.02.2024 issued by respondent no.4 by which the said respondent had passed an order for cancellation of petitioner’s GST Registration. Inter alia the petitioner has also sought a Writ of Mandamus directing the respondents to revoke the cancellation of the said registration apart from relief to declare Section 16(2)(c) and Rule 86B of the Rules framed ultra vires the GST Act, 2017.
Conclusion- Held that the cancellation of GST Registration on the pretext of violation of Rule 86B is a disproportionate punishment imposed on petitioner and is liable to be interfered in exercise of the power conferred on this Court under Article 226 of the Constitution of India.
Held that how a “prima facie” investigation could be the basis of an order of cancellation of GST Registration without the investigation being completed, is not explained by the counsel for the respondents. In our opinion, the respondents ought to have waited for the investigation to be completed before imposing the drastic penalty of cancellation of GST Registration.
