Case Law Details
V.S.K. Traders & Services Vs Assistant Commissioner (ST) (Madras High Court)
Introduction: In a significant development, the Madras High Court has set aside an order cancelling the GST registration of V.S.K. Traders & Services, emphasizing the lack of a reasonable opportunity for the petitioner to present their case. The judgment, dated 23.01.2023, raises concerns about procedural fairness and underscores the importance of due process in administrative actions.
Detailed Analysis: The case revolves around the cancellation of GST registration, effective from 31.12.2022, without providing V.S.K. Traders & Services an adequate chance to be heard. The petitioner contends that, despite regular filing of monthly returns until March 2022, their business faced a setback during the Covid-19 pandemic, leading to a temporary halt in outward supplies for about six months. The cancellation notice came as a shock to the petitioner, who, being a small business, was unaware of the digital show cause notice uploaded on the GST portal.
The court, upon examining the impugned order and considering the contradictory statements within, found the entire process to be mechanical and lacking in fairness. Drawing parallels with a Bombay High Court case (Ahmed Enterprises), where a similar situation led to the quashing of cancellation and restoration of registration, the Madras High Court directed the restoration of GST registration for V.S.K. Traders & Services.
The judgment underscores the need for a reasonable opportunity before drastic measures like cancellation of registration are imposed. The court’s decision aligns with principles of natural justice and ensures that businesses are not adversely affected without proper procedural safeguards. The order allows the respondent to issue a fresh show cause notice, emphasizing compliance with Rule 22(4) of the CGST Rules, within fifteen days from the date of the court’s order.
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