SCN for Cancellation of GST Registration cannot be vague

Sanwariya Impex Vs State of Gujarat (Gujarat High Court)

High Court observed that in this case Show cause notice and impugned order cancelling GST Registration are as vague as anything. The issue is covered by  decision of this Court in the case of Aggarwal Dyeing and Printing Works vs. State of Gujarat & 2 Ors., Special Civil Application No.18860 of 2021, decided on 24.02.2022.

In view of the aforesaid, this writ application succeeds and is hereby allowed. The impugned order cancelling the registration and the show cause notice is hereby quashed and set aside. The registration stands restored.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

1. Rule returnable forthwith. Mr. Utkarsh Sharma, the learned AGP waives service of notice of rule for and on behalf of the respondents.

2. By this writ-application under Article-226 of the Constitution of India, the writ-applicant has prayed for the following reliefs:-

6(a) To issue a writ in the nature of certiorari and or any other appropriate writs, order or direction for calling of records of proceedings initiated pursuant to show-cause notice dated 10.11.2021 and after perusing the same be pleased to quash and set aside show-cause notice dated 10.11.2021 and order dated 03.01.2022 passed thereon by Superintendent, Ghatak 23, Range 6, Division 2, Ahmedabad, Gujarat and be further pleased to direct restoration of registration bearing number 24HGPPS0727A1ZF;

(b) To pass an ex parte ad interim order staying the operation, execution and implementation of the order dated 3.01.2022 bearing reference no.ZA2401220063772 passed by Superintendent, Ghatak 23, Range 6, Division 2, Ahmedabad, Gujarat, pending the hearing and final disposal of present petition; and

(c) Grant such further and other interim reliefs, as this Hon’ble Court may deem fit and proper in the present nature and circumstances of the case.

3. The writ-applicant is a Proprietory Firm. The writ-applicant is registered under the GGST Act with effect from 09.04.2019. The writ-applicant came to be served with a show-cause notice dated 10.11.2021 in the Form GST REG-17/31 calling upon the writ-applicant to show-cause as to why his registration under the Act should not be cancelled. The show-cause notice reads thus:-

Form GST REG-17/31
[See Rule 22(l) sub-rule (2A) of rule 21A]

Reference Number:ZA241121026918R

Date:10/11/2021

To,
Registration Number (GSTIN/Unique ID):24HGPPS0727A1ZF
Shah Hemantkumar Gopalbhai
Shed No.2, Shivalik Industrial Park,
Kathwada, Ahmedabad,
Ahmedabad, Gujarat-382430.

Show Cause Notice for Cancellation of Registration

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 17/11/2021 at 11:30 AM.

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 merits.

Please note that your registration stands suspended with effect from 10/11/2021.

Place: Gujarat
Date:10/11/2021

Signature Not Verified
Digitally signed by DS GOODS AND
SERVICES TAX NETWORK(4)
Date:2021.11.10 15:00:34 IST

SHAILESH KUMAR PATHAK
Superintendent
Ghatak 23 (Ahmedabad):Range-6:Division-2, Gujarat

4. It appears that thereafter the final order cancelling the registration came to be passed on 03.01.2022. The same reads thus:-

Form GST REG-19
[See Rule 22(3)]

Reference Number:ZA2401220063772

Date:03/01/2022

To,
Shah Hemantkumar Gopalbhai
Shed No.2, Shivalik Industrial Park,
Kathwada, Ahmedabad,
Ahmedabad, Gujarat 382430.
GSTIN/UIN:24HGPPS0727A1ZF

Application Reference No.(ARN):AA241121015633X

Dated:10/11/2021

Order for Cancellation of Registration

This has reference to your reply dated 21/11/2021 in response to the notice to show cause dated 10/11/2021.

Whereas the undersigned has examined your reply and submissions made at the time of hearing, and is of the opinion that your registration is liable to be cancelled for following reason(s).

1. Vide e-mail dated 02.11.2021 of Assistant Commissioner Unit-23, Ahmedabad alongwith enclosed letter dated 04.10.2021 of state tax inspector, unit 23, Bachat Bhavan, relief road, ahmedabad have informed that on spot verification no-business unit and activity was in existance and informed to cancel ab-initio the registration of the said Tax Payer.

The effective date of cancellation of your registration is 09/04/2019.

Determination of amount payable pursuant to cancellation:

Accordingly, the amount payable by you and the computation and basis thereof is as follows:

The amounts determined as being payable above are without prejudice to any amount that may be found to be payable you on submission of final return furnished by you.

You are required to pay the following amounts on or before failing which the amount will be recovered in accordance with the provisions of the Act and rules made thereunder.

Place: RANGE V
Date:03/01/2022

Signature Not Verified
Digitally signed by DS GOODS AND
SERVICES TAX NETWORK(4)
Date:2022.01.03 12:45:28 IST

SHAILESH KUMAR PATHAK
Superintendent
Ghatak 23 (Ahmedabad)

5. We have heard Mr. Maulik Nanavati, the learned counsel appearing for the writ-applicant and Mr. Utkarsh Sharma, the learned AGP appearing for the respondents.

6. The show cause notice, referred to above, and the impugned order are as vague as anything. The issue is now covered by the decision of this Court in the case of Aggarwal Dyeing and Printing Works vs. State of Gujarat & 2 Ors., Special Civil Application No.18860 of 2021, decided on 24.02.2022.

7. In view of the aforesaid, this writ application succeeds and is hereby allowed. The impugned order cancelling the registration and the show cause notice is hereby quashed and set aside. The registration stands restored.

If the department wants to proceed further it may do so strictly in accordance with law keeping in mind the observations made by this Court in the case of Aggarwal Dyeing and Printing Works (Supra).