Hypothetical question: –
Whether a writ petition lies before the Jurisdictional Hon’ble High Court wherein the GST Department in India has cancelled or suspended the registration of the assessee without providing a chance to appear before the Authority for adjudication of the matter or one should exhaust the remedy first before the Appellate Authority GST?
Facts
Presuming A is running a business in the name of “DFG Private limited” in the State of NCT Delhi. The business is involved in selling tubes, iron, etc. to various vendors (s). As per the requirement laid down under the Goods and Service Tax Act, 2017 (hereinafter referred to as “GST Act”). A has registered its business under the GST Act. The business was doing well and the owner was happy and content. However, one fine day dated March 12, 2022, A, as usual, was driving from his home which is located in Okhla New Delhi to Bikaji Cama Place, New Delhi wherein his office is located. While he was driving, he was enjoying his morning cup of Tea. The driving period is usually 1 hour as per the traffic. A reached office at Bikaji Cama Place, people who usually visit often might know that parking is a problem. A somehow manages to get the parking space. A enters the office at 10 Am and met with his colleagues and passed morning greeting. Around 11 AM, A got the notice from the GST Department that his registration is cancelled. Now A is clueless about what the company has done wrong, and what to do? He calls his finance team, the finance team looked into the Notice and appraised A that while the notice is issued, however, no date and timing is provided were to appear before the Adjudicating Authority to explain that the action should not be taken because the transaction conducted by the company are genuine, the company have not escaped any payment of taxes and complied with the law.
Rule
Section 22 Person Liable for registration
(1) Every supplier shall be liable to be registered under the Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or service or both if his aggerate turnover in a financial year exceeds twenty lakhs ruppes
Provided that where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable t be registered if his aggregate turnover in a financial year exceeds ten lakh ruppes:
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Section 29 Cancellation [or suspension] of registration
(1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where-
(a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
(b) there is any chance in the constitution of the business;or
(c) the taxable person, other than the person registered under sub-section (3) of section 25, is no longer liable to be registered under section 22 or section 24:]
[PROVIDED that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.]
(2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,-
(a) a registered person has controvaned such provision of the Act or the rules made thereunder as may be prescribed ;or
(b) a person paying tax under section 10 has not furnished return for three consecutive tax period;or
(c) any registered person, other than a person specified in clause (b), has not furnished return for a continuous period of six months; or
(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, wilful misstatement or suppression of fact:
PROVIDED that the proper officer shall not cancel the registration without giving the person an opportunity of being heard
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Analysis
In the given facts and circumstances narrated hereinabove, A received the notice from the Goods and Service Tax Department dated March 12, 2022. However, the finance team appraised A that the notice as received contains no date or timing as to where the officials of the Company have to appear along with the reply to explain that the Company is complying with the law as stated and has not violated the provision of the Goods and Service Tax Act. The department has provided the notice, without giving a chance to hear the assessee.
The act itself is violative of the “Provided part” of Section 29 sub-section (2) of The Central Goods and Services Tax Act, 2017. The same is reproduced verbatim: –
“Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard”
Therefore, the action taken by the proper officer of the GST Department is not adequate since the notice contains no date nor time to appear before the Adjudicating Authority.
Now the question of filing a writ petition may not arise for the reason that there is Appellate Authority GST wherein the assessee may approach after consolation and explore the remedy available. For any reason, in case the Appellate Authority doesn’t appreciate the grounds taken by the assessee, only then the assessee may after consultation explore the remedy of filing a writ petition before the Hon’ble High Court and get the order set aside on such grounds which the Appellate Authority has not taken into consideration while delivering the order and is not in line with the law.
Conclusion
In the peculiar circumstance, after consultation/ clarification, A may consider first avail the remedy available under the Act and explore it before the Appellate Authority. Further, A may consider after consultation/ clarification, in the case when there is some infirmity with the order passed by the Appellate Authority does the assessee approached the Hon’ble Jurisdictional High Court to set aside the order passed by the lower authority by taking grounds which are not in line with the law[1].
The author of this article can be reached at dachambersconnect@outlook.com for any discussion or clarification. Please feel free to drop a mail.
[1] Disclaimer – This is solely for informational purposes/ knowledge sharing and this information should not be considered as legal, professional advice, service, advertisement, or solicitation in any manner whatsoever. Deepanshu Arora further assumes no liability for the interpretation and/or use of the information contained in this post, nor does it offer a warranty of any kind, either expressed or implied. The contents of the information are provided “as is”, with no guarantees of genuineness, completeness, accuracy, or timeliness, and without representations, warranties, or other contractual terms of any kind, express or implied. Please reach out to your legal advisor for advice before making any decision w.r.t to the contents of the information.
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